Thinking about buying Netflix ($NFLX)? Here’s your trade – January 21, 2022
NFLX PTON
Fitz In Five here and we’ve got Netflix ( NASDAQ: NFLX ) taking a dive (I just made that up).
Anyway, this is the thing, I think the company opened at 20 percent down or something, they just had really brutal numbers, I don’t need to tell you any more about it, the chart speaks for itself. Peloton ( NASDAQ: PTON ). These are two stocks that really got crunched.
With respect to Peloton ( NASDAQ: PTON ), the downtrend is still intact. The thing about this is, they announced today that they are halting production. And the reason they are halting production of those wonderful bikes that make your butt really, really sore, and when ridden by heavy people, who aren’t used to riding bikes, they wind up sitting in the corner of the living room where the handles make great coat hangers or if you are ironing your clothes you put them there. That’s great, I did the same thing ages ago with a Bowflex, lot’s of hooks there.
This could turn out to be a buying opportunity for Peloton ( NASDAQ: PTON ), you see how it was up today, right? But here’s the thing, no. Why would you want to buy something like this? This is a massive head and shoulder pattern here. The bloom has come off the rose, nothing bur thorns here. I would totally stay away from this, without a doubt.
Now, Netflix ( NASDAQ: NFLX ), we’ve got a similar thing here. Let me look at the weekly chart. Here’s the thing, if you are looking at Netflix ( NASDAQ: NFLX ), like oh, this is a buy, and I bought some today, I will explain that in a second, you better be looking at it as a short-term trade. Because this has been a brutal sell-off. It started a while ago and while the high was at 700.00, this thing just closed down 44 percent. Do you think that is enough? Do you think that is enough of a pullback? I could show you a bunch of stocks, most of them owned by Cathie Wood, genius stock trading savant that she is, that have gone down a heck of a lot more than this. I would absolutely stay away from this.
However, with that said, 3 standard deviations are these Bollinger Bands and they give you a picture, that 2 standard deviations, which is the typical one, that it doesn’t. This thing gapped down and closed way below these lower Bollinger Bands. Typically, you are going to get kind of a snapback. But when you get a stock that closes below 3 standard deviations, and this has already been drifting lower, this is a recipe for a bounce of some type.
It is kind of like against the laws of physics or trading for the stock to be this far out away from the mean, which is the 20-day moving average, and yet, here we are. The low Bollinger Band is 396.93. The close today was 396.80. So this is a steep, steep, steep correction that is ripe for a rebound. I wouldn’t look for much, though, but I would look for some. Because look at the massive selling today, almost 60 million shares. That’s a lot of puking. And after a puke fest is pretty much over you will get a little puking rally. That is what this is all about.
So here’s how I would trade this, don’t try to pick the bottom. You have got plenty of time to get in. If it does start rebounding, the high here is 409.15, I would set an alert at like 405.00, just to give you the heads up. And at 409.16, that is when I would look to start buying this thing. You get a little early start, okay, fine, whatever. But if the stock rallies above today’s intraday high of 409.15, then you know the selling is over. Because if it wasn’t over the stock would not be able to rally above today’s intraday high.
Free Chart