NFLX breakdown watch

Discussion in 'Stocks' started by Stocks4life, Apr 3, 2013.

  1. starting to slide here, large price gap to fill (40%)

    BREAKDOWN WATCH for possible breakdown below 162.31, no support in area just below.
    Type: Continuation breakdown from single support.
    Target: 137.4, 19.2% Cover: 180.85, Loss: 6.3%, Profit/Loss ratio: 3.1 : 1 - Excellent

    CURRENT PRICE 170.2, at support, 167.9 ± 5.54, type single, strength 8

    SUPPORT BELOW -40.4% at 101.4 ± 3.34, type single, strength 1
    -45.2% at 93.33 ± 3.08, type double, strength 3
    -50.8% at 83.66 ± 2.76, type double, strength 9


  2. mktforecast

    mktforecast ET Sponsor

    Backtested performance of NFLX for the 10 days after its RSI, return, and relation to previous Highs and Lows are similar to what they are currently.

  3. Your analysis is a little too simplified, imho... I still think it is going to come back to fill some of the gap along with drops in GOOG, and LNKD and more lows for AAPL.
  4. Not counting earnings, which is a red/black roulette type of bet, I like the 150 area for a long.
  5. It looks like Stocks4life has timed the NFLX breakdown very well. Nice work! There appears to be MAJOR topping action in the 176-196 area, and NFLX broke at 174. Big resistance from 176-180. 164.66 last. I have a trade suggestion that utilizes options, and involves selling a credit spread. While there are many credit spread pairs that can be chosen (it trades weeklies also, with good liquidity), an idea from this week's weekly options is to sell the 180/185 credit call spread, which involves selling the Apr-12 180 calls, and buying the Apr-12 185 calls for about a $0.30 credit.
    It should be realized that, while the return on your invested capital may look small ($0.30 / $5 maximum risk), it is 6% in a week...and still allows for a 9.3% move higher (from $164.66 to $180). Maximum profits will be realized if the stock closes below 180 by this Friday. Other NFLX call credit spreads may work well also if you believe, like I do, that its near-term highs have been seen. Note that Q1 earnings are scheduled to be released on Mon., 4/22, and the stock as been very volatile around earnings.

    The Netflix 1/23/13 shareholder letter mentions "Carl Icahn became a 10% investor last quarter at approximately $58 per share. We have no further news about his intentions, but have had constructive conversations with him about building a more valuable company."

    Saturday's Barron's Follow-Up column had positive things to say about Icahn Enterprises' (IEP) track record, but indicated that Carl's 33-year-old son, Brett Icahn, and his investment partner David Schechter were the ones behind the NFLX investment, "the second-biggest winner in the S&P 500 this year with an 80% gain"...not Carl.

    NFLX stock, though, looks a bit wobbly right now...closing just below 165 on Fri., 4/05, and losing over $24/share on the week. Michael Pachter of Wedbush reiterated his $55 NFLX target late in the week. “It is a worse company than it was three years ago,” said Pachter. “They have destroyed their DVD business, they are chasing windmills overseas, where content owners are going to fight them.” “They are trading like they’re worth $30 per domestic sub, when in fact they make just $2.50 today.”

    Pachter was asked about the initiation of coverage of Netflix by RBC Capital‘s Mark Mahaney on Monday, with an Outperform rating and a $210 price target. “Mark is an incorrigible optimist,” said Pachter, continuing, “Netflix did something very clever in Q4. They made $950 million in revenue, and they spent $937 million, so they produced $13 million in profit that took the stock up $5 billion in market cap. Was $13 million really worth $5 billion in stock value? They were expected to lose tons of money, they produced a small profit. Who cares?”

    IMO, the market may not do much this next week, as everyone begins taking a look at Q1 earnings. Alcoa leads off on Monday afternoon. NFLX may not do much either, as it consolidates after a difficult week. I like the 180/185 credit call spread sale a lot, but
    some of you who like NFLX, or don't expect another large move lower this week, may consider selling a 145/150 credit put spread for about $0.33, which achieves maximum profits as long as NFLX closes above $150 this Friday...8.9% below Friday's closing price. Or sell both credit spreads! Make it work! :) - Value Buyer
  6. we are getting close to total breakdown, the latest breakdown update is below 158.11 so we are around 160 and it is the line in the sand any further and the gap below will be breached.