Forget Amazon (AMZN) and Alphabet (GOOGL). Here’s your trade on Netflix (NFLX). (April 27, 2017)
NFLX BIDU NFLX
We got some really strong earnings, after the market, on Amazon ( NASDAQ:AMZN ) and Google ( NASDAQ:GOOGL ), but I am not going to cover those. Because if everybody else is covering them, what do you need me for? I want to look at Netflix ( NASDAQ:NFLX ), here is why: The stock broke out the other day on news that they are going into China with a company owned by Baidu ( NASDAQ:BIDU ), right? That is really good. There are a lot of Chinese people over there who really, really like TV; it is all good.
The stock moves up but then there is no follow through yesterday, which is kind of a little bit, I wouldn’t say troubling, it is just kind of like it is what it is. The same thing here with Baidu ( NASDAQ:BIDU ), a big move up and then no follow through. Not a big pullback. Not a big retracement. Just nothing to get really get excited about. And you think, “Well there has got to be more to it than that.” So then today the stock starts trading back up here again.
This is some kind of candlestick pattern that people who are into that type of thing know more than me. I will say this is like the ‘lopsided ice cream sandwich pattern’; where you have got the one bun, whatever you call the one side of the sandwich, and then the ice cream is kind of melted, so this side is kind of slid up, it has kind of slid this way, and then here is the red ice cream in the middle. So I guess it is a lopsided strawberry ice cream sandwich pattern. It is a very bullish pattern. I have known about this pattern for probably 20 or 30 seconds, and it always works out.
Here is the thing: On Netflix ( NASDAQ:NFLX ), I bought a bunch of calls on this. Maybe I should have just bought the stock but the calls are actually pretty cheap. Go out a month or two, do that. Buy the 150.00s maybe the 155.00s even, but buy some calls on this stock. My bet is, you will make a gang of money. Because when we look at this weekly chart, I mean look at this thing. This has been drifting sideways forever. That was like 10 or 15 pounds ago for me, where this thing has been drifting sideways. And this is kind of what it does here.
This is just coming out of a real prolonged, fairly shallow base here. Kind of, I guess you could say it is a cup, here is a little handle. I would actually look at 150.00 as the breakout, so it is kind of there now. I think if this stock breaks out above 155.00, I think it could easily go to $200.00 in the next several months, certainly by the end of the year. If it doesn’t breakout above 155.00 then, seriously, it has zero chance of going to $200.00, and that is just math. Actually, it is more counting than anything else.
The bottom line is this: Netflix ( NASDAQ:NFLX ) is broke out above $150.00. This is what we want to see. There is a catalyst, and it is going into China. That is more than a one-day wonder. You are going to see, over the next several quarters when they report earnings, you are going to see more stuff about that. That is the type of catalyst, it is kind of like the gift that keeps on giving. So Amazon ( NASDAQ:AMZN ), Google ( NASDAQ:GOOGL ), fine. They have made great moves. They will probably go up even more tomorrow. But for my money, and my piece of mind, get a little Netflix ( NASDAQ:NFLX ); I swear this is not a ‘House of Cards’ (that was really a bad joke).
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