Our NFLX Short Hits Big

Doing what most of us do, it's hard to stand back and look at the bigger picture when you watch the market all day every day, but that's where the real probabilities are and the shorter term trade of hours, days and weeks are to be viewed as tactical compared to the big picture's strategic view. As Jesse Livermore once said, "Give me TIME, not TIMING", fortunately our "outside the box" thinking, concepts and indicators try to accommodate both.

I have long called NFLX,  "One of my favorite core short positions"  for months now. Being a core short, unlike the trading shorts we are engaged in now, NFLX, like HLF, SCTY, etc. are core short positions I see no reason to try to trade around, but rather enter them at the right spot and just let them be, let them work for us longer term.

It appears in after-hourds NFLX's earnings have disappointed, actually, more specifically their Q4 guidance which is some thing I often mention with regard to earnings, "The market doesn't care what you did, they care what you're going to do",   therefore the market is all about perception and with Q4 Guidance coming in at $.44 (EPS) vs the consensus $.84 , perceptions just hit a wall and tell traders, "This last quarter was as good as it gets , thus there's no longer any reason to hold NFLX. The light new subs and ad revenue didn't help either, but like AAPL or MSFT before it, the growth story in NFLX is over.

We have 2 entry positions I have in the tracking portfolio for our NFLX shorts and as of right now, post earnings, they are up +21% and +30.5%.

I expect at some point market makers may have been caught with inventory at a loss and will look to get out of that inventory ... at some point, but a bounce won't change things for NFLX going forward and the large top we have been tracking is just getting started.

This is our long term 3C leading negative divegrence/distribution and a large top pattern. The current price in AH at the red arrow hasn't even broken the top pattern yet so I suspect over the months to come, we'll see much bigger downside gains in NFLX as a core short position.

Congratulations for those of you who believed and hanging in there. The objective evidence of distribution has been there, now significant gains accompany it.