Here’s your trade on Netflix (NFLX) (December 02, 2014)
I want to look at Netflix ( NASDAQ:NFLX ) today. Look at the weekly chart, this looks like a big long top here to where the stock is about to tumble out of bed and start moving down. But it also looks like it could be a long base, a high base where the stock moves up and through. So what do we do?
Well we’re not going to know whether either one of these things is going to occur for quite a while; we have to watch and wait for this type of thing, but it doesn’t you can’t trade the stock. Instead you look at the daily chart and say, “Well I get this, the stock was in a squeeze here, it fell out of the squeeze instead of moving higher. Okay too bad so sad and then the stock drifted lower, finally got crushed down here, now it’s back to test this low.”
So do we short this stock? No, the stock has printed a higher low here and relative to the lower Bollinger Band it’s printed a higher relative low. Because you see the price here was just barely outside the lower Bollinger Band, here the price was well outside the lower Bollinger Band. So from a price action standpoint the stock is now back roughly to this level here, but it’s actually higher.
So I would say, and you know you can make this trade with options, I would say that your support for this is probably around 340.00, probably about there because that’s roughly where the bottom was. So you can be trading this stock. This was that trading journal suggestion that I gave you in last night’s video; if you haven’t watched it please do so, you’ll find it very helpful and it will make you money.
You’re looking at price targets here so I would say that this was support. So it’s broken through, if Netflix ( NASDAQ:NFLX ) does continue to bounce, to start struggling here. That’s roughly about 20 points from where it is now. On a $350.00 stock 20 points isn’t a lot; you can buy some options on this if you want, longer-term options that give this stock a chance to rally up here. So that’s one trade that you can make on Netflix ( NASDAQ:NFLX ).
Or, you can sell some puts on it, sell some out of the money puts and that will make money too if Netflix ( NASDAQ:NFLX ) does hold to this higher low. In other words if it doesn’t just continue to drift down I think either one of those strategies will work for you. The stock ultimately looks like it’s going lower, lower highs, lower lows until now. But this is still the resistance line, so any way you slice it it’s right around there. So that gives you a couple of short-term ideas for Netflix ( NASDAQ:NFLX ); I hope that helps.
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