Result: The week following this post, NFLX dropped 10%.
NFLX 6/22/17 $154.89
Bold call, we know, but Netflix is looking tired…
Netflix, a NASDAQ and trader favorite, has a lot of nervous investors in it right now who are looking to jump ship. Not only that, there is little conviction pushing the stock. Chart 1 below illustrates a couple of truths about the state of the stock, which as chartists, we know is a clear representation of all of the investors that are in it, or who have a vested interest in it.
So what do we know?
- We know it has been the last few years, a powerful trender… crazy to short
- We know they continue to beat their numbers (they just did – that is out of the way) and pile on millions of subscribers
- We know the new season of House of Cards is already baked into the cake / chart…
- And as technical analysts, we know the chart had a major downside break around June 11th and 12th . Since then, the stock has been mounting a very meek comeback and on tepid volume, no less.
- We know that since that downside blip, word on the street is that the market, without FANG, is fairly broad. Also, there are other opportunities out there in high growth that still have “intact” charts, like Tesla, where uptrends remain nicely.
Right now, Netflix’ chart is indicating it is due for a rest. With such a heavy concentration of investor, trader, hedge fund, and institutional dollars invested in the stock, and other areas starting to outperform OTHER than FANG related names, we believe NFLX is a short here, perhaps down to the $140 level in the short-term. A good opportunity for the bold to take a wildly unpopular stance on a FANG favorite.