Is It All Over For Netflix?

Hello traders everywhere! Adam Hewison here, co-creator of MarketClub, with a special look at Netflix (NASDAQ:NFLX).

The market action in Netflix yesterday suggests that for the moment this stock has put in a fairly significant top. While all of our Trade Triangles continue to be in a positive mode, yesterday's market action created a "negative engulfing or bearish engulfing pattern." A top will be confirmed should Netflix close lower today.

Also notable, Carl Icahn has sold a shade under 3 million Netflix shares since Oct. 10th, at prices from $304.23 and up. The largest portion was the 2.4 million shares he sold yesterday at $341.44, for more than $819 million. Mr. Icahn still owns about a 4.5% stake in Netflix.

While the major trend in Netflix continues to be positive, it is going to take some time for this stock to repair the technical damage that was created on Tuesday. I would not be surprised to see this market quiet down and begin to regroup after yesterday's massive $68 trading range.

Several of the major stocks I discussed in last Thursday's post became great examples of a "52-week new highs on Friday" trade.

Purchased on Friday @ $333.18
Exited on open on Tuesday @ $387.84
Profit on trade: $55.71

Facebook (NASDAQ:FB)
Purchased on Friday @ $54.21
Exited on open on Tuesday @ $54.33
Profit on trade: $0.12

Purchased on Friday @ $508.60
Exited on open on Tuesday @ $528.40
Profit on trade: $19.80

Here are the three rules you need to make a "52-Week New Highs on Friday" trade:

Rule #1: On a new 52-week high, when the market closes at or close to its high on a Friday, buy and go home long for the weekend.

Rule #2: Exit long position on the opening the following Tuesday.

Rule #3: If the market opens lower on Monday, exit this position immediately.

As always, I appreciate your comments and questions, so please feel free to leave them on this blog.

Every success and have a great day,

Adam Hewison
Co-Creator, MarketClub

4 thoughts on “Is It All Over For Netflix?

  1. The selection of streaming movies and shows on Netflix is poor at best. At some point that will really do a number on them if they continue to refuse to rectify it.

  2. Hypocrites! Every last one of them! This is exactly one of the proposals offered by conservatives in the House and Senate and they were demonized by the media and the left for it. Now the left is considering it and its somehow a 'genius' idea! One of the very proposals turned down that exacerbated the shutdown because of complete obstruction of compromise from the aspiring dictator and his minions on the left. This is beyond astounding. Like a person that has an idea and its dismissed, only to offer the same idea themselves and consider it a stroke of genius. Absolutely pathetic.

  3. NFLX went up on the earnings report. The pullback was all about Icahn dumping $1 billion of stock. He made a huge profit and cashed in a good chunk of it. AAPL had a pre launch-event run-up. The "52-Week New Highs on Friday" rule may work but these are not good examples, as they are easily explained by recent events.

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