NFLX Gives Earnings Some Bite

After CAT missed today on Revenue, EPS and gave poor guidance (you know what I think as to why it performed the way it did today), but still managed a nearly 3% day, it seems that Wall St. is creating the sentiment to go along with that most obvious of bases, the Inverse H&S base which I can darn near guarantee you was not there by chance.

NFLX had a fantastic report, whether they would have surged over +22% if Wall St. weren't supporting earnings is obviously a debate that can never be settled(sentiment), in other words, "It isn't the news, it's how the market reacts to the news-just look at CAT!).

I looked at NFLX for several people today and was asked whether I thought NFLX would roar in to earnings, my opinion was yes, and to look for a regional high >$200, which it's at $212, but added NFLX seems to have some longer term trouble and the second part of that trade may be the more interesting part, who would guess a +22% AH move? It really comes down to what it does in regular hours, but there are some very interesting possible NFLX trades over the next few weeks or perhaps even sooner that may make a lot of sense.

In any case, the point is more to the atmosphere, the sentiment, the really clear bait in the form of the most obvious bottom pattern that anyone who has even looked at a Technical Analysis book would instantly recognize, in fact some seem more prone to recognizing the H&S base or Inverse H&S more than the top which over the course of the last 100 years has been one of the most reliable price patterns out there (so long as it is correctly identified with volume analysis). Much of the market was fooled by a H&S top price pattern in the SPX from Jan. of 2010 to July of 2010, it was an obvious random pattern as the most important confirmation, volume analysis, clearly showed it was not a valid top.

The point really still going back to last night's post, it seems that Wall Street has set up a very friendly atmosphere inviting longs in, I don't think they'll want to spook them as I was saying last night with short term head fakes and tricks, I think they have their eye on the prize and that is getting retail to trust in and buy this base they have set up (Good thing we were set up for this last week).

Again, the ultimate goal can be summarized by any number of charts, from currency, to Futures to Treasuries, to volatility, market breadth, market averages, or any number of 100 different indications. The prize is an early counter-trend rally as the SPX has finally made a lower low in the 2013 trend and sell the shares accumulated last week in to higher prices, the same thing we want to do and continue selling short in to demand and price strength, again, the same thing we want to do.

I think this was one of the great, "Charts of the day"... from the linked post published earlier today...

Here's the Bloomberg US Macro Data Surprise Index, (Negative vs. Positive data surprises for 2013).

The Index is now at negative lows not seen since November of 2012...
It looked very familiar... This is the Market Breadth indicator, T2108, All NYSE stocks trading above their 40-day moving averages which should rise in to a healthy rally...
As you can see, the percentage of NYSE stocks trading above their 40-day moving averages' hit a high of 85% in January and a low of 37% last Friday, which is also a level not seen since November of 2012...