NFLX Position Update

NFLX has been a long term short of interest for a pretty simple reason...

 This is the 4 hour 3C chart going from in line at the left side of the uptrend to a large negative divegrence in something that looks similar to a broadening top, the most recent leading negative low really has my attention.

I've already filled out a NFLX short position that is in the red by about 3.5%, which is well within my comfort zone, especially for a top where there's a lot of volatility, but I won't be adding as this is already at full size, I'll just be patient,  that doesn't mean there isn't an opportunity to add.

This 15 min chart shows a head fake move or false breakout/failed breakout that I suspect was the top in NFLX. While NFLX came in at consensus and a beat in certain areas,  the only thing Wall Street really cares about is what you will do next and NFLX guided lower which means Wall St which already seems to be moving out of NFLX, is just found that they are justified in doing so.

Unlike retail that reacts to news immediately, Wall Street isn't going to add shorts in to a day NFLX is already down nearly 5%, they simply can't at the size of their positions and they have the ability to move assets to more favorable areas. I suspect NFLX will offer an opportunity to start a new position or add to an existing one at slightly better prices, plus I don't like chasing anything, I'd rather let it come to me.

Along those lines...

 The 50-day expo moving average is right in the area so retail will likely buy the dip with the average in the area and there are gaps on the upside that institutional money can use to sell/short NFLX. This is where I'd prefer to wait for an entry and I think chances are good you get it, but price alerts will need to be set.

 Here are several gap areas and an area of interest as a head fake/false breakout which I don't know if NFLX can hit, but it would be an ideal area. With the 4 hour chart looking the way it does, I can almost guarantee there would be distribution in to any move higher, but as always I want to confirm that and look for the best timed entry.

The large volume also on today's decline is indicative of a short term capitulation/selling or exhaustion event leaving NFLX some room to bounce, but I will admit I feel much better already having a position in place.

 Interestingly yesterday before earnings were out, NFLX saw a gap up that was sold in to. We also see confirmation on today's downside move. However, while not a smoking gun yet...

The lateral intraday trend along with support of the 50-day and the volume event, I suspect this 1 min chart that is showing some positive divergences will build a slightly bigger base for NFLX to bounce from in to the gap areas where I'd be setting price alerts.

The other thing I'd be watching for is the health of the broad market's overall move, such as the IWM. We did see a number of momentum stocks up yesterday (almost everyone on my list from late last week) in a down market, but with the lowered guidance, NFLX is going to have a more difficult time.