NFLX Follow Up

Other than being a long term core short which was up well over 30%, we first started following the next set-up and let NFLX do it's thing, let it come to us on what were a joke of earnings. I wouldn't be surprised if we see Q1 2014 disclosures with numerous funds dropping NFLX completely, ala AAPL/Appaloosa Fund.

In any case, after following it for over a month, I think I'm about ready to say, ?YES, I like NFLX short here, but I do want to show some charts and the way I look at a NFLX position which is simply my own view of things.

 This primary trend with the 4 stages of NFLX is the way I view the NFLX position, not a swing trade, not a 2 month trade, but looking for stage 4 decline. You can see the characteristic rounding bottom of a stage 1 base and the 3C daily chart accumulation with it. Then 3C confirmation at stage 2 mark up or where public participation starts to grow, then stage 3 top which like many of the other averages, appears to be a Broadening/Megaphone top.

You can go back to the Jan. 21st post and see why I think the earnings were bunk, why I thought NFLX was set up in advance to rally no matter what earnings were and especially if they were bad and how that had a lot to do with inventory held at higher levels that had to be cleared out from an earlier gap down.

The move since the earnings gap up has grown more and more parabolic, but still within the Broadening top and the 3C trend would suggest that it is a top. So I'm looking for the stage 4 trend that retraces all of the gains since the 2012 base and likely then some.

 60 min chart's overall negative or distributive trend...

The faster charts are going to have more detail and sharper divergences, but a 30 min chart is still a very respectable timeframe and the divergence here has been unrelenting, suggesting to me that the same thing that happened to AAPL in Q4 in which some large funds like Appaloosa dumped their entire position in a quarter, is most probably what is going on here, funds that size need demand and higher prices to sell large positions in to otherwise they just collapse price on their position at a loss, basic supply/demand dynamics.

 I suppose you could call this range and the subsequent move above it, akin to the Igloo/Chimney price patterns in the major averages, most assets will behave in similar fashion although relative performance will differ.

This 2 min chart tells me the same, this was likely the head fake move of this entire run and as such, would be the best timing signal.

And the intraday chart which is not all that meaningful compared to what's above.

I'm glad to see the range and break above in the same area as the markets' Igloo w/ Chimney price patterns and the negative divergence in to it. With all of these timeframes and a head fake event, this is what I'd call a full house and whenever possible, I want to use head fake events to enter trades as they have better entries and less risk.