113 Reasons Why Netflix Is A Screaming Short….Still
- Posted by Greg Harmon
- on September 29th, 2011
Well maybe not quite 113 but at least 13. Netflix ($NFLX) stock had a bad day Thursday, falling nearly 11%. That was after rising more than $5.40 off of the lows. But it has also been a bad week, down over 12% and a bad month, down over 50%. In fact it has not had a good time since announcing a change in it’s pricing plan. I can read your minds now, “this is old news”, “you are late to the party”, “its down so far, tell me when it will bounce!” What if I were to tell you that even down over 62% the technicals suggest it might have a long way yet to fall. Let’s take a look at the charts on three time frames.
Netflix, $NFLX Daily Chart
On the daily time frame, above, the fall Thursday came after a breech of the 61.8% retracement of the long run higher. This picture shows the Relative Strength Index (RSI) in the teens ans flattening and the Moving Average Convergence Divergence (MACD) indicator improving. These support consolidation or a up move. What? This is supposed to be about the downside. but I did not say it would all be tomorrow. With the resistance at 127.50 above, it may retest there. That would be a great short entry. Why? First if you look at the rest of the chart the next level of support is at 100 from August 2010. Second, all of the Simple Moving Averages (SMA) have rolled lower and, third, are progressively crossing through each other. Fourth, this chart shows that the Measured Move (MM) comparing to the move from 210 to consolidation at 130, or $80, creates a target of 50 for the stock. That might be enough to convince you but I promised more. Lets look at the weekly chart now. Here the RSI is sloping lower and not quite as extreme , fifth, the MACD is still growing more
Netflix, $NFLX Weekly Chart
negative, 6th, supporting more downside. There is the support at 100 clearly shown again, so we can not add that, but the next level down of support, and reason 7 is not until 62.50. The eighth reason is that the SMA’s on this time frame are also all just starting to roll lower. Now moving out to
Netflix, $NFLX Monthly Chart
the monthly chart above shows the big picture and adds the last 5 reasons. Number 9 the monthly RSI is pointing sharply lower and number 10, the MACD has just crossed negative on this timeframe. Reason 11 is that now below the 61.8% Fibonacci the next test will come at the 76.4% or 78.6%, whichever you use, at 72.23-78.74 below. Number 12 is that the support below that Fibonacci space is not until 40. And finally number 13, after falling below the mid point of the Bollinger bands it now looks ready to test the lower band, near 40. Still want to look fro that bounce?
If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.blog comments powered by Disqus
Gregory W. Harmon CMT, CFA, has traded in the Securities markets since 1986. He has held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
- Premium Earnings 7-23-14
- What Does the VIX Say?
- Craving Some Tex Mex
- Premium Earnings 7-22-14
- Watching Key Long Term Trend in the Nikkei
- Downed Jets, Ukraine Conflict and Gaza Battle – JP Morgan Says ‘So What’
- Premium Earnings 7-21-14
- Top Trade Ideas for the Week of July 21, 2014: Bonus Idea
- Top Trade Ideas for the Week of July 21, 2014: The Rest
- Top Trade Ideas for the Week of July 21, 2014: The Rest Premium