NFLX Earnings

NFLX is one of our core short positions, this simply means that it is at full or intended to be at full position size and it is intended to be a longer term or trending trade, not a trading position.

So you probably hear already, NFLX beats on EPS, misses on revenues (as the headlines say, but it looks like they came right in on revenues to me). Apparently the fly in the ointment is subscriber growth and market saturation.

NFLX will hold their call at 6 p.m. so I'd expect after hours to get more intense than it is now as NFLX has settled around a loss of -6.5% or -$17. The After hours range was as low as -11%. I personally don't put much faith in after-hours numbers for analytical purposes.

As I have been talking more frequently on the subject of "best timing" vs. highest probabilities longer term, I said today that I should be concentrating more on the longer term charts or at least providing a good snap shot of those for you and you can see why NFLX is on the core short list. Please remember that there are no implied price targets here (although from time to time we can come up with something pretty close) and these are not short term trading signals, these are longer term signals giving us an idea of what the probabilities are for the longer term trend (market conditions have a lot to do with actual outcomes).

This is a great chart, it's a 3C chart that reduces noise, it's not as detailed, but major trends are much clearer. The reason I like this chart is it shows the herd mentality among smart money, it shows the accumulation area or Stage 1 and how that is done in to lower or falling prices with a fairly flat average price. It shows how price almost always surpasses where the 3C divergence first started even if price fell lower during the accumulation phase, it shows stage 2 "Mark-up" and Stage 3 distribution, which we suspected would be above the area $200-ish area because the resistance area was so well defined (you'd have to read the "Understanding Head Fakes" articles to understand this).

 The 60 min chart shows the area we expected price to move above and therefore waited for that event before taking a position or large position short NFLX. The accumulation to push prices past the $200 area can be seen on the more detailed chart.

The 30 min chart shows where distribution went from strong relative to stronger leading and it's right around that Jul8th area where so many events occurred including the end of the AUD/JPY carry trade which can have a large effect on equity as the carry trade is closed out.

The 10 min chart has more detail, there's a small accumulation area, this is when we started to get bullish and suspect the market was headed higher on June 21st, 1-day before the ultimate market lows, that accumulation in NFLX (as well as market wide) is seen here, but it's not enough for a trend this long, I believe there was to be an initial pullback around the 8th and something happened very quickly that changed all dynamics and sped up the entire process with VERY strong distribution in the period AFTER the 8th.

We'll see what the CC has to say, but I'm looking at NFLX as a longer term position.