NFLX Set-Up Follow Up

Here's the initial NFLX Trade Set-up right after they posted some bum earnings and the gap target we expected would be filled which was.

With The Q's looking like they are putting in a Chimney right now and several other assets, like AAPL also deteriorating, it's not surprising to find NFLX deteriorating on the charts as well, typically the broad market is going to be the biggest directional factor influencing any individual stock followed by their Industry group's performance next.

As for NFLX charts...

 This is NFLX's last cycle on a daily chart: Stage 1 base/accumulation, Stage 2 Mark-up/Participation, Stage 3 Top/Distribution (with a Broadening Top) and then we had the gap down, likely leaving some middle men holding inventory at higher levels and then the gap up which as was discussed in the original idea linked above, "Perception is all that matters", in other words, NFLX's not so spectacular earnings and price's reaction had almost nothing to do with actual earnings and everything to do with the perception of earnings that NFLX's price action dictated, which in my view (as the set-up was already there before earnings) likely had more to do with allowing the middle men trapped with inventory at higher levels from the gap down, to get out, this is why we were looking for at least a gap fill.

To the far right is a "P" for a parabolic move, as you probably are well aware, I never trust them in either direction, they tend to fails as spectacularly as they start (in either direction) and they are often changes of character that are red flags like a Channel Buster.

 Here's a closer look and today's daily candle is not looking great, I'd like to see that hold in to the close and volume to rise above yesterday which looks like it will no problem.

This is the 2 hour chart that shows a positive divegrence before earnings, there was a set up here to move NFLX higher and I think it was going off no matter what earnings were, but before you can even read the earnings report, price flying to the upside sets the perception of earnings, even if you had time to read the full report which was not impressive.

I said in the original Trade Set-up that I'd like to see this 2 hour chart go negative, I wasn't sure if it would, but it has.

As for the longer term 30 min trend since the gap, this is the kind of 3C chart I look for. You can squeeze information out of any chart, but it's the ones that are jumping off the page that have the greatest edge, the ones I don't ignore and it should take less than a second to see it on the chart, that's how obvious the edge should be.

On a 15 min chart since NFLX went parabolic at the yellow arrow, you can see what the 3C reaction has been, not one of support, but distribution, I don't think NFLX was in a good place to begin with as there's a large Broadening Top, but you still want the best tactical entry even if you understand the strategic probabilities are strongly skewed in favor of one direction or another.

It's just a bonus to see the stages playing out as they should and have these charts confirming.

 Part of multiple timeframe analysis is having signals line up in multiple timeframes, what I call, "A full house", often these shorter charts that aren't particularly strong, are the most important at the end as they are the best indication of tactical timing.

Intraday NFLX doesn't have much support here either which is what I want to see in to a parabolic move.

The probability that QQQ is making a "chimney" on the Igloo/chimney" top formation is a bonus and the fact NFLX's relative performance on the day is off, is another bonus.

I'm going to bring the NFLX equity short tracking position from half to full size, which I view as a longer term trend trade.