The 200-day moving average ceiling on $NFLX is still in effect – October 19, 2022
NFLX
I want to come back to Netflix ( NASDAQ: NFLX ). Yesterday, in the Chart of the Day, I mentioned that Netflix ( NASDAQ: NFLX ) was something that you didn’t really want to chase simply because this 200-day moving average was going to be the ceiling. I think it was up 12 percent last night after hours. Now it is up 13 percent, and my call really still stands.
I had actually suggested to members this morning that they consider shorting the stock on this gap, with a stop just above the 200-day moving average. But that trade didn’t really work out, on kind of a day trade. If you had shorted it your stop didn’t get hit; if you put it where I had suggested it did not get hit.
However, I don’t like to be shorting these stocks, kind of these rocket ships, I shorted it right here. This is a 5-minute chart, I shorted it 15-minutes into the day, something like that because I thought the stock was going to go down, obviously, it didn’t.
The one thing I know about being wrong, and this is really cool, is nobody likes to be wrong but you can immediately be right if you just change your mind. It’s really, really easy, most people don’t do that, certainly most traders because the problem with most traders is, they think they are smarter than the market; you’re not. And they are very stubborn and don’t like to admit they’re wrong, you are, both stubborn and wrong.
The good trader, at least in my experience, is happy to pivot if they get evidence that the trade that they thought was going to work is not working. That was the case here as far as a day trade. Now, with that said, I still see the 200-day moving average as holding. I am not saying that Netflix ( NASDAQ: NFLX ) can’t fly up to $500.00. I am just looking at this from a technical standpoint and I see this stock still kind of in a basing pattern even though volume is super high.
What I would suggest, frankly, if it’s me, I don’t have a position in Netflix ( NASDAQ: NFLX ) I actually have a bull put spread in Netflix ( NASDAQ: NFLX ) and a bear call spread, and no I didn’t put on an iron condor. I just kind of happened to put them both on and it turns out they become an iron condor.
So I have kind of got Netflix ( NASDAQ: NFLX ) sandwiched in between strikes. I just don’t think it to go above 300.00 and I really don’t think it’s going to go below, I think it’s 230.00, something like that. So this is how I am trading Netflix ( NASDAQ: NFLX ).
But what I am telling you right now is, there is really no clear direction on this stock. And so you would be well advised to either do what I am doing, what I’ve done, which is just kind of sandwich the stock with options. It is probably not coming into this box and probably not coming into this box. As long as it stays here it’s all good, I make money. That’s the way I am looking at this and you may want to consider looking at it the same way too.
Free Chart