Time to Sign Up for Netflix

• Posted by Greg Harmon
• on April 16th, 2014

I have never subscribed to Netflix, $NFLX. No House of Cards for me. My streaming has all been through Amazon. But it seems it is time to get involved. Well with the stock anyway. The chart below shows that Netflix has been printing bottoming candles the past 4 days. You are probably thinking that it looked like it might be bottoming the 4 days before that and look how that ended up. Fair enough. But there are other things that are different this time. it has crossed the 200 day SMA for the first time since December. Notice that the RSI is moving higher and making higher lows. The MACD is also flat and turning and about to cross up. And the bottom Bollinger band is starting to turn up. This has the making of a double bottom. The daily chart offers a good reward to risk

against the bottom Bollinger band as a stop. But this is also a decent spot on the long term monthly chart. After pulling back from 2011 to 2012, the stock launched higher to a 161.8% extension of that move. The current pullback has retraced and nearly retested back to the 100% level. It may have a little further to go but the daily chart seems ready. Perhaps start with a 1/4 size position or sell some Puts on the 305 Strike in May, near that 100% level, to get started.

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