NFLX Watch

The movie rent-by-mail company Netflix Inc. (NFLX) moved into bear phase today on the macd on the second day of retracement in a rise that began in October 2008. The chart shows it as a buying opportunity in the making.

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
NFLX $116.96

The question for tech analysis is how for will the downtrend go.

This is the second day of decline -- on rising volume Monday and slightly less volume today (with an hour before the market closes).

An eight-day sideways pause in late May and early June defines the area where we must look for a lower low, which proves to be $104.79 on June 2.

If that level -- $104.79 -- is broken, then NFLX has set a lower low, creating suspicion that the uptrend has come to an end.

Another view -- a bit more macro -- would see the sideways trend as having begun in mid-April, and the lower low being $90.81 on May 21. A break below that level would turn suspicion into a moral certainty, at least in my mind.

NFLX has been a wonder-child among stocks, happily staying ina wide sideways trend as the economy melted down in 2007/2008, and then in 2009 beginning a stunning uptrend that carried the price from $17.90 in October 2008 to 10 times that amount today.

However, a smart trader never forgets that no trend is eternal, and the one eternal truth of the markets is that all things pass, giving way to something new.

Reversal Levels

• $127.96, +9.4%
• $127.10, +8.7%
• $116.96 <== You are here.
• $104.79, -10.4%
• $90.81, -22.4%

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Disclaimer

Tim Bovee, Private Trader tracks the trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment. No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.

Abbreviations:

• psar - Parabolic Stop and Reverse
• adx - Average Directional Index
• pps - Person's Proprietary Signal
• ma20 - 20-day moving average
• macd - Moving Average Convergence-Divergence
• sto - Fast Stochastic

About the glance: The colors indicate the state of each signal.

• trend: Determined by the 5-day moving average, green for up, red for down, yellow for sideways
• adx: orange for above 30-up, blue for 20-down, purple for in the middle. Red is most prone to whipsaws
• psar, pps, macd: green for bull mode, red for bear
• sto: green for overbought, red for oversold, yellow for the neutral zone.