Netflix, Inc., an Internet television network, engages in the Internet delivery of television (TV) shows and movies on various Internet-connected screens. The Company operates in three segments: Domestic streaming, International streaming and Domestic DVD. It offer members with the ability to receive TV shows and movies streaming content, including original series, documentaries, and feature films through a host of Internet-connected screens, such as TVs, digital video players, TV set-top boxes, and mobile devices.
Take a look at the 1-year chart of Netflix (NASDAQ: NFLX) below with my added notations:
After declining significantly in December and January, NFLX bottomed out and moved into a sideways trading range. During the most recent three months, the stock had stalled at a level of resistance at $100 (green). Now that NFLX has broken above that level, $100 should provide support for higher prices.
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The Tale of the Tape:: NFLX broke through its key level of resistance at $100. A long trade could be entered on a pull back down to that level. However, a break back below $100 could negate the forecast for a higher move and would be an opportunity to get short the stock.
Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.
No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!
Christian Tharp, CMT
Follow me on Twitter: @cmtstockcoach