Cup with no handle? Check out Netflix (NFLX). (December 03, 2015)
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I want to get to Netflix ( NASDAQ:NFLX ). I think this is a pretty interesting pattern here. Even though so many stocks were down so much today look what Netflix ( NASDAQ:NFLX ) was actually poking at a new high earlier in the day before it fell back. Look at the daily pattern. Note over the last three days here’s your intraday high, here’s your intraday low. Then yesterday, a higher high and a higher low. Today, a higher intraday high and a higher intraday low. So even though so many stocks were getting whacked, Netflix ( NASDAQ:NFLX ), oh my gosh it’s down over a percent and a half, that’s horrible. Not really.
Now, if Netflix ( NASDAQ:NFLX ) falls further, and that’s fine, I’m not looking for this as a trade. I’ll tell you EXACTLY why I’m looking at this. I’m looking at this, this is a little cup here. This is a cup. Not a cup and handle; it’s just a cup. You’ve got a high and then a pullback and then a retest of that same high level with a little cup in between. This is a really, really nice SOLID base. It’s a high base, it’s a base within an uptrend. We like these, unless we’re short. So, when you look at Netflix ( NASDAQ:NFLX ) now, look at the possibilities. If the stock starts pulling back, that’s fine.
And again, I’m not talking about a trade, I’m talking about wanting to own Netflix ( NASDAQ:NFLX ). If the stock starts pulling back let it do that, that’s all good. Let it pullback like this, right into there. Hopefully volume will kind of be drying up a bit it won’t be super high. This would be known as a handle and THEN that sets up a move there, and that’s when you want to be long the stock. It’s not to say that you want to wait for the stock to breakout above there. No. Note that this is a cup. This is the 50-day moving average that has defined where support is.
So watch as this thing trickles up. If Netflix ( NASDAQ:NFLX ) trickles sideways long enough for the 50-day to catch up to it. Or if it just falls back to the 50-day moving average, that’s a great time to be buying this stock. But ultimately I think the path of least resistance on this stock is higher, you can see it in the weekly chart. You can see that this stock has been resolving to the upside on these consolidations. So Netflix ( NASDAQ:NFLX ) is one that I think you want to be buying on any kind of weakness.
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