Netflix (NFLX) continues to trade at lofty heights. Here’s what to do now. (January 30, 2013)
NFLX
I’m Dan Fitzpatrick at StockMarketMentor.com on Wednesday the 30th of January. In this video we’re going to look at our good friend Netflix ( $NFLX Netflix, Inc ). This is really pretty brief, I don’t have a lot to say about it. I think this is the first day since before the break out that the stock has actually traded or closed underneath the upper Bollinger Band. I mean this thing has just been deathly strong, I think I might have mentioned in this venue, I’m not sure, that a couple days ago I’d actually shorted this stock, I shorted it on this first day here and decided that probably wasn’t a real good idea because the stock wasn’t going down, so I closed it out, and yes, I took a small loss. I wasn’t happy about it a bit, but I was really happy the next day when the stock absolutely screamed, and I mean, talk about losing your shorts, it would have been really bad. So the bottom line is, what are we going to do with this thing now? Look, when you have a stock that was at a $100.00 just a week ago and now it’s at $167.00, you’ve got to watch that stock because it’s going to be a heck of a move. I believe that the move is lower, listen to me because I’m giving you pearls here, I am not saying that because I lost money on this stock, on the short side, a few days ago. The reason I’m going into that detail is, because if you’re like a lot of traders, I should say a lot of newer traders who have not really thought things out, you sometimes have to go back and trade a certain stock until you can make money on it. Just because that worthless no good whatever cost you money before, so it’s like you have some vendetta against a ticker symbol, which is about one of the silliest things you can imagine, but people do. So the reason I’m not going into Netflix ( $NFLX Netflix, Inc ) here, isn’t because I want to prove myself correct, I was proven wrong, I closed the trade, this is a brand new trade. So here’s what you do. Again, I’ve got to just look at this, and I think the path of least resistances is down, just because we’re seeing some resistance on the upside here. So we look at couple days ago, on Monday, the high here was $177.25. Now, I don’t think the stock has it in it to get above that level, so here’s what you can do. You can short this stock, first of all you could just sell the stock, take the money and run, do the Steve Miller trade if you were long, which is what I would do if I were long. But you could short this stock and just have a tight stop above this high of $177.25, make it like $178.00 or $179.00, which on a percentage basis is a very, very tight stop. But this is where you’d get your, oops, I’m wrong signal on any rise here. I think, with the market tiring just a little bit, you’re probably going to get off a pretty decent short here on Netflix ( $NFLX Netflix, Inc ). But again, you’ve got to have a tight buy stop right up here, because these stocks, like this, I mean look at the weekly chart, I mean this just looks like a rocket ship. But doesn’t this look, on this weekly chart, like a stock that you would not want to buy right now? Well, I think there are a lot of folks in that camp, so if they’re trading and they’re not buying, what do you think they’re doing? They’re selling. Okay, members over to the Strategy Session where we’re going to go through exactly what’s happening in the market, because I think we’re kind of getting a little sea change here and so I want to talk about that. Free Chart