Friday, August 6, 2010

NFLX Watch

The mail and streaming movie rental company Netflix Inc. (NFLX) moved to bull phase on the parabolic sar and macd after an employee of the company posted, on the networking site Reddit, that NFLX is hiring developers specialized in Adroid, Google's cellphone operating system.

Streaming movies on cellphones! That's worth a 6.3% intraday move.

NFLX $113.57

OK, so I'm laughing wildly at this market action, which has not come on a huge volume spike.

1) It's an employee making the statement on a website, not a company announcement or an interview with the CEO. I mean, who is this guy? What does she or he really know? Talk about iffy sourcing. Wikileaks has higher standards.

2) So, this is a surprise? NFLX developing an app for Android? Why wouldn't they? NFLX is a very smart business, and smart businesses go where the technology leads. Only stupid businesses (like newspapers) try to ignore the fact of technological change.

Even so, let's do the chart.

The price pushed above the 20-day simple moving average for the first time since July 21, the day a disappointing earnings resulted in a downward gap on a huge earnings spike. The price has been trading above the 200-day exponential moving average for three days.

Today's upward move puts the price at the midpoint of that gap, and market lore says that midpoint retracement of a gap will often result in a bull back and further decline. So, if you believe in market lore, be warned.

The rise bumped up against the lower level of a sideways move that covered much of July, and the price pulled back from that point. Not a confidence inspirer.

In the longer term, NFLX the past three months has stalled in an uptrend that began in October 2009. The high in that push was $127.96, so the price must exceed that level for the uptrend to be seen as continuing (a higher high).

Person's Table
ppspps openupper pivotlower pivot
NFLX $113.57 $104.97 aug4 $109.25 -3.8% $88.63 -27.0%

On the Person's chart, the move blasted past the weekly upper pivot and stalled just below the second-order upper pivot at $115.95.

Reversal Levels
  • $127.96, +12.7%
  • $123.60, +8.8%
  • $113.57 <== You are here.
  • $95.33, -16.1%
I like NFLX once it has broken above the $127.96 level. I don't like it on such weakly sourced news. The whole thing strikes me as being an overheated tempest in a cliched teapot that will soon cool.

The Great Reflation: How Investors Can Profit From the New World of Money
OK. The credit bubble burst. Housing, burst. Shockwaves reverberated. Markets collapsed. What lies ahead as we reemerge from the wreckage.

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.
  • 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.

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