NFLX Update

I think most everyone knows what to look for on a downside (or upside) "flameout" (intraday capitulation/short term selling event). We've had this scenario several times this week and I have posted what to look for and it seems you guys are making the concepts your own, which is all I could every hope for.

We have some history with NFLX...

 This 60 min chart of NFLX's two gaps up, both earnings based, shows the long term underlying trend of distribution. At #1 to the left is Q4 earning and the gap up which needed to be done to relieve market makers of underwater positions from the 10/16 gap down in which they likely got caught holding inventory at levels almost 20% higher.

Our entry (short) took place on 2/26, Trade Idea: NFLX Short, the best entry you could ask for, but we had to wait for it since the first Trade-setup, NFLX trade Set-Up, on 1/21, the day of the earnings gap up..We patiently waited for the right signals and finally entered on Feb. 26th, at the red arrow (vertical) Trade Idea: NFLX Short. A short at the highest close of the entire move, but it took patience.

After the most recent earnings (Q1) based gap up, on April 21st we started looking for the NFLX short entry, NFLX Update / Trade Set-Up. Our last short entry on April 27th, Trade Idea : NFLX Short

So why NFLX calls? We use multiple timeframe analysis and try to match the right trading tool (trade) to the timeframe we are trading. For a longer term position, the Trade Idea: NFLX Short is fine, but for a near term bounce....Today's, Trade Idea: VERY SPECULATIVE...NFLX Short term CALLS was the right tool for the time frame and expected move.

This is the 10 min chart showing strong deterioration.

However very near term the one minute chart is showing a positive divergence in line with the market balance we expected. Two thirds of stocks will move directionally with the market.

This two minute chart of Netflix shows a much cleaner divergence although it is only a two minute chart and thus we can't expect much more than a bounce. This is the reason I chose to use the leverage of options.

The three minute chart is also positive, But that's about where it ends.

This is the five minute chart as you can see, negative

At 12:13 PM today, I got this email:

"And there it is a spike below post earnings lows, yesterday low and this mornings low. High volume.

 

Let the short squeeze begin ..."

This is what our member was looking at...

As I have said over and over again, it doesn't matter what the asset is, It doesn't matter what the timeframe is. The best price-based indication of a trend reversal (on this short term trend), is a head fake move. In this case it would be a stop run. This is exactly what our member was referring to as you sent the email at the red arrow as price broke below the intraday lows on surging the volume (stops are being accumulated).

I'm glad to see the concepts being utilized.