70 Reasons Why Netflix Is A Screaming Short….Still…and Still
- Posted by Greg Harmon
- on November 22nd, 2011
At the end of September when Netflix, $NFLX, was trading at 113 and already down over 50% from its highs there was discussion in the markets about whether it had fallen to fast and would it bounce. Was the business model sound. There were theses on both sides. I was decidedly bearish looking for it to go much lower (link to the September 29 Article, 113 Reasons Why Netflix Is A Screaming Short….Still, below). Now that it has fallen nearly another 40% down to 70 it is time for others to review their theories. For me, there are still 70 reasons why it is heading lower. Start with the monthly chart below. First, price is still heading lower on this time frame. Next, the Relative Strength Index (RSI) is also trending lower and is now in bearish territory under 40. Third, the Moving Average Convergence Divergence (MACD) indicator continues to grow more negative.
Next, now through the 76.4% or 78.6% Fibonacci area there is nothing left but a full retrace down to 8.91. Tenth, with 6 trading days left in the month the down volume is likely to be at least the 3rd largest monthly volume in this 8 year view. Next, it is below the mid point of the Bollinger bands which are expanding downward. Eighteenth, all of the Simple Moving Averages (SMA) have flattened and are starting to roll lower. The next stop on this timeframe looks to be around 40. Moving to the weekly chart, below, shows the that it has blown through support at 100 and made an attempt to pause at 80 but is still printing good sized red candle, reason #25. Next the 20 week SMA is about to cross bearishly through the 100 week SMA and all of the SMA’s are heading lower
or flat. Reason 32 is the RSI at 23 is firmly bearish but not yet extreme. Next the MACD continues to run negative with both Exponential Moving Averages (EMA) moving lower, the indicator is improving but slowly. The next support lower comes at 62.50 and then 50 below that. And number 43, the Measured Move lower comparable to the move from 128 down to 78 before a bounce takes the stock down to 45. Finally on this time frame the Bollinger bands are still expanding lower. Now moving in to the daily chart shows reason number 58 that unable to hold the 74.25 gap lower or come close to closing the gap it is making a new low. There is another gap lower at 60 which is
reason 61. All of the SMA’s are sloping sharply lower. Next the RSI is still only at 27, not near any extreme level, and pointing lower. The MACD is actually about to cross negative again, a bearish indicator. Volume on this latest push lower is increasing. And reason number 70, it is not at zero yet. (Share you additional reasons with me in the comments section.)
If you want to know how I would trade this names or for more ideas and deeper analysis, use the Get Premium button above. As always you can see details of individual charts and more on my StockTwits feed and on chartly.
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)
- Weekend Macro Roundup
- Top Trade Ideas for the Week of September 2, 2014: Bonus Idea
- Top Trade Ideas for the Week of September 2, 2014: The Rest
- Top Trade Ideas for the Week of September 2, 2014: The Rest Premium
- Top Trade Ideas for the Week of September 2, 2014: The Best
- Should Trading and Investing Really Not be Fun?
- SPY Trends and Influencers: Monthly Edition August into September 2014
- SPY Trends and Influencers August 30, 2014
- Macro Month in Review/Preview August into September 2014
- Macro Week in Review/Preview August 29, 2014