This stock was an early gainer at the beginning of the market rally in March and April. It ran into trouble but has built a very constructive bottom the last 2 months.
Notice on a weekly chart how the closing prices from the weeks ending 5/15 through 6/12 saw almost no change. That’s a sign of institutional accumulation. The week of 6/19 price advanced out of the range on excellent volume and after falling back the following week has now closed in a tight trading range for another 3 weeks in a row.
This morning price extended higher on volume on the back of a specious rumor that the company would be purchased by Amazon.com (AMZN). That rumor was essentially laid to rest by an analyst on CNBC. But after an initial spike lower price has held up, a sign that whether or not there is any truth to the rumor there may be validity to this price move.
I would consider long entry here with a stop under the midday low around $41.50. If price surpasses the June price highs on continued volume a move back to the 52 week highs around $50 is a real possibility in continuing market uptrend.
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Lying with Statistics: the September Jobs Report
12 years ago
We're up over $5 in this one and there could well be more upside. But two things bother us about the chart.
ReplyDeleteFirst, volume has not been exceptional on this up move.
Second, the RS line is a terrible laggard. Price is approaching the previous highs yet the RS line is far from making a new high itself. That's troubling, especially on a stock that's run very far on unconvincing volume directly ahead of its earnings report this evening.
We have no objection to holding a winning stock through earnings, but in this case would suggest trimming at least half to bank a very solid gain.
As we feared, NFLX imploded on a fine report. Analysts have been wary that growth is likely to slow given the multiple platforms for movie delivery to the home, and the report gave credence to that view.
ReplyDeleteWe suggested banking gains in this one just pennies off the highs of the move. If you maintained exposure damage control suggests selling into the first rebound off the opening gap down in the stock.
NFLX could well see higher prices ahead, but for now the money has been made here and reentry awaits another set up. In the meantime there are better places for your cash.