NFLX Chart Request

I was asked about this chart in an email today and thought I'd share it with everyone as there are some interesting things on the chart we can learn from.

 On the daily chart, NFLX (which in my opinion is a horrible service- there are several services I access through my PS3 that have much better movies and I'm willing to pay more for them, even the RedBox and BlockBuster Kiosks have better titles and they are reasonable) is clearly in trouble. At the first red box is a genuine breakaway gap, it is not filled and this is the most bearish gap you will see, there's actually another earlier in July and another in August. The more slender (second) red box is typical of an exhaustion gap on the biggest 1-day volume, it is also called capitulation or a massive shakeout of longs. Typically this is the end of the downtrend, but price almost always drifts lower. At the white arrow volume drops way off and the price trend is lateral, this is accumulation breeding ground which in a 4 stage cycle (accumulation, mark up, distribution/top and decline) would be considered stage 1 accumulation and it is apparently on foreknowledge of a possible buyout that only came to light later. After stage 1 accumulation is complete, Wall Street finally wants to draw attention to the stock, this probably came on news of a buyout rumor although I haven't checked when that news hit. So no we are in stage 2 mark up. The big green volume IS NOT institutional money buying, they did that in the quiet of the white arrow area. It's hard to say how long stage 2 mark up will last, but most technical traders mistake the large green volume as institutional buying, they don't buy in to rising prices, they sell in to them, it's all supply and demand and they buy in to supply and sell in to demand.

Stage 3 would be distribution. Where ever their average accumulated price is, they are definitely at a profit now, they need to let out distribution a little at a time as to not kill rising prices.

 Here's the accumulation area seen clearly on a 30 min chart, it was strongly leading before price ever moved up.

 Short term we can see distribution, I would think these are smaller block trades as they let go of some of the accumulated shares. They have a huge long position and they need demand and rising prices to continue to sell in to it. If they tried to dump large blocks they would send price lower.

The 15 min chart is just starting to show some distribution, but I would say that they are not done. I would expect a pullback as they don't want a overbought condition to sink prices either, then the next leg up I would expect more distribution. When this 15 min chart starts leading negative and other timeframes align, that may be the time to look for a short opportunity, it is not now though unless you are looking for a swing counter trend pullback play which is dangerous here.

I would think a pullback won't break below the hourly trend channel yet. Subsequent pullbacks should be deeper and may move toward the 10 and then 22 day moving averages, it may even be a buying opportunity for a swing long. I just don't see this as being ready for any short set up, although there is evidence that distribution has begun.