Yet Another NFLX Short Idea
Not that everyone needed another NFLX short idea but here you go!
Disclosure: I am short NFLX.
The bearish case is still intact despite this euphoric rally, unless the quarterly earnings report is a major beat by all standards.
The late December head fake breakdown of the descending triangle reached its upside targets and the rally is facing a heavy cluster of resistance. The resistance cluster is better seen on the weekly chart and is the line in the sand which will determine NFLX's performance in 2019. I will close my short trade if, on a weekly closing basis, NFLX closes above the declining trendline, which is sitting at ~$340, and opens/closes above the 30 week moving average. These two critical signals would tell me that NFLX has likely broken the downtrend from late Summer 2018 and is likely to reach new all time highs.
If I am right and the bearish case wins out, my targets are $300, $280, and $220. These targets could be realized as quickly as this $340 level was realized. Please ignore the targets drawn on the chart. They are from October 2018.
As I'm sure you already know, a lot of this depends on the quarterly report on 1/17/2019. I'll give it a 65/35 chance that it disappoints on a critical data point, whether that be Q4 subscriber growth or 2019 guidance. Given the technical picture, I believe this to be reasonable odds. Lastly, it could gap up on earnings and still continue the downtrend like it did on the last report. In this case, the weekly closing criteria I proposed previously may have to be ignored. I'll update this idea after the report.
Best luck trading,
Mackerel
Disclosure: I am short NFLX.
The bearish case is still intact despite this euphoric rally, unless the quarterly earnings report is a major beat by all standards.
The late December head fake breakdown of the descending triangle reached its upside targets and the rally is facing a heavy cluster of resistance. The resistance cluster is better seen on the weekly chart and is the line in the sand which will determine NFLX's performance in 2019. I will close my short trade if, on a weekly closing basis, NFLX closes above the declining trendline, which is sitting at ~$340, and opens/closes above the 30 week moving average. These two critical signals would tell me that NFLX has likely broken the downtrend from late Summer 2018 and is likely to reach new all time highs.
If I am right and the bearish case wins out, my targets are $300, $280, and $220. These targets could be realized as quickly as this $340 level was realized. Please ignore the targets drawn on the chart. They are from October 2018.
As I'm sure you already know, a lot of this depends on the quarterly report on 1/17/2019. I'll give it a 65/35 chance that it disappoints on a critical data point, whether that be Q4 subscriber growth or 2019 guidance. Given the technical picture, I believe this to be reasonable odds. Lastly, it could gap up on earnings and still continue the downtrend like it did on the last report. In this case, the weekly closing criteria I proposed previously may have to be ignored. I'll update this idea after the report.
Best luck trading,
Mackerel
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