Want to see a good picture? Check out Netflix (NFLX) (July 30, 2015)
I want to look at Netflix ( NASDAQ:NFLX ) here, and here’s why. The stock gapped up when the company reported good earnings on the evening of the morning that they split 7-for-1. In other words the first day that they split, that they traded 7-for-1, then they reported great earnings and you can see what happened, the stock popped. This has happened before with Netflix ( NASDAQ:NFLX ), not the 7-for-1 split, but you look what happened here before.
The stock gapped up, never really gave you a chance in. It just drifted sideways and kept going. You know you’ve seen it both ways. However, Netflix ( NASDAQ:NFLX ) does have this characteristic of gapping up and not rewarding those that fade the gap. So here’s the thing, I’m looking at this as essentially a filled gap. Anybody that’s been listening to me for a while knows that I’m not one of those guys that just blindly says, “All gaps must be filled.” Not true.
Look at Mike Strahan’s teeth; those are gaps that will never be filled. By the way, that was a joke because I love that guy; I think he’s a crack up. Anyway, my point is that for the most part this gap has been filled. The stock broke out, came back and tested this level right at the 20-day moving average, and is now moving higher again on heavier than average volume, if you consider average volume being basically what the stock had been doing since the split.
So here’s the deal. I added to my position today, I actually put some on a couple days ago; “Option Market Mentor” members have had this on for a while. I think this is a buy signal. It’s giving you an opportunity to get into a stock that on a weekly chart. I don’t think this is a trading stock by the way. So we look at the weekly chart; it just keeps going up, pretty choppy. There have been times when you’ve had to be patient with it.
By the way, this has been when it’s been a trading stock. But we get these uptrends here. I think we’re in another one. The fact that the stock remains above the 7-for-1 split level tells you that liquidity is not the reason why this stock has been moving higher. The reason that the stock has been moving higher is because investors consider this to be a growth stock and everybody likes growth. So I think you’re good buying it right here.
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