Quick Daily Glance at Flag and Support Levels in Netflix NFLX

Jan 26, 2011: 6:01 PM CST

With NetFlix announcing better than expected earnings after the bell Wednesday, I thought it was a good time to take a quick look at the recent history and current structure (reference levels) as seen on the daily chart for clues about what to expect next.

Here’s Netflix (NFLX) daily chart (not including post-market gap to $200):

Netflix is another one of those ‘amazing’ or ‘high-flying’ stocks that I’ve heard recently compared to Crocs (CROX) and of course Apple (AAPL) as being ‘revolutionary’ (in the way we watch TV/movies).

I’ll leave that to others to discuss, and focus squarely on the current chart picture, trade lessons, and current levels to watch.

First – from a lesson standpoint – look closely at the recent Bull Flag declining trendline breakouts and subsequent tests of the rising 20 or 50 day EMA along the way.

I’ve written many times how there are two main trade entries into a high-flying stock like this:

1.  Breakouts above falling ‘flag-like’ trendlines

2.  Tests of rising 20 (preferably) or 50 day EMAs (preferably when a reversal candle forms)

I won’t spend any more time than that, only I encourage you take a look at these prior entries so you can use this as an educational reference.

Now, we have two things setting up right now.

FIRST, price broke another falling trendline in early January that didn’t really produce much of a skyrocketing bounce as has been the case in the past.

That’s certainly something to watch closely, but as we’ll see tomorrow morning – if the stock stays about where it is now post-market at the $200 level – we’ll have another short-term flag-style breakthrough as drawn.

FINALLY, note the critical horizontal support line at the $175 price level – it contained sellers and encouraged buyers to step in on four occasions since December.

It now is a permanent chart reference and immediate level buyers and sellers will be watching – with stops placed under the $170 level.

And as usual, any further price push to new highs beyond $210 in the next few days/weeks will likely be seen as a confirming buy signal and trend continuation omen, so that’s the upper level to watch for a bullish breakthrough and trend confirmation.

Of course, $200 (where we are as I’m writing this post post-market hours) is a nominal “round number” level and big psychological level to watch just for its “round-number” characteristic.

Should be interesting!

Corey Rosenbloom, CMT
Afraid to Trade.com

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2 Comments

2 Responses to “Quick Daily Glance at Flag and Support Levels in Netflix NFLX”

  1. Tweets that mention Quick Daily Glance at Flag and Support Levels in Netflix NFLX | Afraid to Trade.com Blog -- Topsy.com Says:

    […] This post was mentioned on Twitter by Corey Rosenbloom and Brad Stafford, Brad Stafford. Brad Stafford said: RT @afraidtotrade: Quick Daily Glance at Flag and Support Levels in Netflix $NFLX http://tinyurl.com/46uhyca #MKT $$ […]

  2. Hortensia Pinger Says:

    I like this stock as long as the trend line isn't broken.