We're starting to get that intraday bounce mentioned (SPY was building an intraday positive divegrence as the averages were all red for September). This puts quite a few of the watchlist candidates that are hitting alerts on the upside, on the table for action soon.
NFLX is one of the trade set-ups we've been waiting for, specifically a head fake move. I t appears there was one attempt, today looks clearly to be the second and today looks a whole lot closer. I feel pretty certain that the NFLX short (position trade) entry is going to be right in this area, the timing is the only issue now and there's pretty much only 1 chart that needs to be watched for that.
The NFLX head fake trade/set-up has all come down to this small resistance area which shows 2 resistance areas, today we have gapped up and pierced both at least on an intraday basis. Volume is higher on the move which is what a head fake move is meant to accomplish so that's a good sign as well.
Other than the short term capitulation event on 7/22, volume is good. The first attempt lifted volume at the first white arrow from the left and today's move has lifted volume on a move above the resistance zones, again one of several reasons for a head fake move and a way to identify it as being such as these exist not just to fool traders, but for real tactical purposes that are related to trading large positions, especially in a low volume environment.
On intraday charts there's no confirmation of the move which is a good start, but not an entry in itself.
The 5 min chart
is the one to watch. The first attempt to break resistance and breakout was met with distribution (resistance at the first yellow trend-line from the left) which created a new resistance level, but the resistance zone is really more important than the exact level and the broad psychology of the move, it needs to be convincing.
The second attempt today is seeing a deeper leading negative divegrence, IT'S THIS CHART I WANT TO SEE REALLY DETERIORATE FOR A TIMED ENTRY, OTHERWISE, NFLX IS ALREADY THERE ON A STRATEGIC BASIS.
The 15 min chart moves from in line to leading negative on this leg (The August cycle) so it's already giving good signals which should deteriorate significantly more once the 5 min loses its footing completely.
As for the longer term or strategic point of view, NFLX has been ready for a while, the trend has been strong distribution, it has just been a matter of the best entry with lowest risk and best timing. This 60 min chart is drawn like the first two negative divergences were relative (the weaker form), they were actually leading negative, but I do that just to show how bad the last run (August cycle) has been as it has moved completely in the other direction, one of the best looking divergences out there and one of the reasons I like NFLX short so much.
Of course on an even longer term basis, the 4 hour chart shows what the resolution of highest probability is,
the odds are VERY skewed in our favor for a very ugly move to the downside and a beautiful short trade.
Remember, I'm going to be looking for the 5 min chart at this point, but I think we are pretty much in the location as we have been for the past several weeks.
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