Steve Miller trade on Netflix (NFLX)? (July 19, 2017)
NFLX
I want to look at Netflix ( NASDAQ:NFLX ) today, because I think you have got to sell the stock. Here is the thing, if we look at the weekly chart you can see, this stock looks like it is just getting going, again on a weekly chart. Actually it looks like it just got going quite a while ago. The thing is, on a short-term basis we kind of have to look at this, the stock is trading at 183.86, lets draw this box over here. Do we think this stock is never going to get back inside this box? Will there never be one opportunity for you to be buying in here? I kind of think there will be. After the kind of move that this has made in a couple weeks, from 150.00 up to 183.00, it is a pretty substantial move. If you are an investor and you want to keep a position in Netflix ( NASDAQ:NFLX ), I think you are good. Who doesn’t think this is going to at least $200.00, maybe more? Probably more. But it just kind of depends on your time frame.
If we look at the daily chart, look at the volume. This was the day leading up to earnings. A lot of pin action then, a lot of traders positioning for earnings, either exiting or wanting to buy the stock before they reported earnings. Then here comes Monday night; the stock screams higher, it gaps up and opens higher on Tuesday and closes near the high of the day. That is a real bullish thing. When you have got a stock that gapped up bigly, kept moving and closed near the high of the day. That is what strong stocks do and you want to stay long those stocks. So today we get a higher intraday high, up here, and a higher intraday low. Also, really, really cool. But, notice that the stock has closed in the bottom third of the intraday range. Not that big a deal, but I will show you a couple other things. First of all, I am bullish on Netflix ( NASDAQ:NFLX ) but I am short this puppy right now by spreads. I have a bull call spread, not that far above the level, but all we need to see is a little bit of normalization, a little reversion to the mean and my account will be really happy.
If we look at the chart here, 181.75 is the low of the day. If this stock prints 181.75, 181.74 tomorrow, one penny below today’s intraday low, it is going to be the first time we have had a lower low since the 6th. Every single day this stock has literally printed higher lows and higher highs, including today. But volume, while twice average volume, is like less than half the volume yesterday, so volume is kind of drying up. Only 17 million shares traded today, but volume relative to yesterday is lighter. Also, if we look at these Bollinger Bands, 3 standard deviations, it is like a rule of nature, it is a law of nature that the stock is not supposed to be above or below 3 standard deviations. So the stock tags this today, and that is all she wrote on that thing, and the it falls back down. So this has already tested the very, very extreme level and is now coming back a bit. You can see the 5-minute chart, tested before noon and then since that time had been kind of trailing off.
My point is, if you have made money on Netflix ( NASDAQ:NFLX ) and you are a trader, you are not looking to see what they are going to be in 2018, then it is time to take profits. Do the Steve Miller trade, take that money and run and then let this thing have a chance to reset. Good traders, profitable traders aren’t going to be long this stock. Ask any of them, they will tell you, it is time to go. Elvis is leaving the building, you go with him and have that peanut butter and nanner sandwich.
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