Tuesday's regular session was far from what the bulls wanted to see. The bullish opening gap was faded immediately and, if we're looking at the Invesco QQQ Trust (QQQ) , dip buyers didn't emerge until the gap filled. As you can see on the chart below, even after buyers stepped into the market, the session's volume-weighted average price (VWAP) kept a lid on any afternoon recovery.
While it's impossible to say if Tuesday's after-hours strength will continue into this morning's open, it's worth noting that QQQ, along with all the index ETFs, spiked higher immediately following the better-than-expected results from Netflix (NFLX) .
Speaking of Netflix, the company beat its forecasted top- and bottom-line numbers. That's great, but what got investors excited was the company's net new subscriber numbers. After guiding the street to expect one million new subs, Netflix came through with an impressive 2.41 million new subscribers. It followed that news up by forecasting 4.5 million new subscribers in the December quarter. Suffice it to say that if Netflix comes up well short of that 4.5 million in the fourth quarter, the stock will be in for a nasty start to the New Year.
As far as trading NFLX is concerned, I no longer consider the company to have a compelling growth story, so I probably won't invest or trade it. I'm also not interested in chasing the stock into its declining 200-day simple moving average. That said, if you like the stock, it's worth knowing that most traders will monitor the breakout level around $250. And if you're swing trading the stock and willing to give it a little room, consider using $234 as your stop point because it represents that VWAP anchored to the mid-August swing high.
