NFLX Update

I figured I'd kill two birds with one stone. You may recall last week a big part of what led to the forecast for this week with market upside was the time I took to go through numerous watchlists, single stocks and see if there was a pattern among them. I said that there was and as you know, AAPL was used as a market proxy , but I could have used just about any of the stocks, I just had seen enough by the time I hit AAPL and it's a stock of interest to a lot of members.

NFLX was part of that watchlist as well and had very similar signals to AAPL suggesting we see a breakout of what in many cases were triangles, NFLX is not one because of preceding events, but it has been a short position and one entered not too long ago.

In updating some of the movers today, now that we are also getting the anticipated market movement on the upside on what is widely being considered "Slightly more hawkish minutes", but that is being offset by the horrible jobs numbers from Friday even though Dudley this morning essentially said they were an anomaly that should essentially be chalked up to noise.

Still, NFLX should do just as nicely for an update as to where we are as well as a trade set-up if you also remember the forecasted ending of this move which is well inside a large trading range that some would and have described as "Churning", that's distribution, I think the 3C charts would agree with that assessment, thus the patient, "Let the trade come to us" as our NFLX short is still at a nice profit even with today's near 4% move.

 This is where we last shorted NFLX at the red square and arrow at the top of the price trend, on the highest closing day since the NFLX-joke-like earnings gap up. We waited patiently for the signal and entered when we had strong objective evidence that NFLX was going to do what we suspected based on longer term charts and luckily shorted it at the very highs, which is not necessarily a realistic everyday goal to try to attain, but being close enough to lower risk and maximize the entry is the goal.

Since you can see a small 60 min relative positive, it's not the kind of divergence that would have me concerned about the short entry as the size of the leading (stronger form) negative vs the size of the relative (weaker form)  positive is immense.

However that is some clues that the same 15 min positives that I have been referring to market wide as well as individual assets (as most stocks will move directionally with the market as it exerts about 66% of the directional influence on any given stock)  as a sort of line in the sand for this move or the extent of what's in the "gas tank". As you can see, just as forecasted last Thursday, the move began Monday (as the forecast was for this week's market action) on the 6th as we returned from a 3-day weekend.

Like most of the averages, this 15 min chart is still intact although we are now seeing deterioration broadly speaking as the process of migration or a stronger divergence building continues and is now making its way to 15 min charts as seen in updates earlier today.

 As I said and showed you on Tuesday, the 10 min charts of the averages saw deterioration much faster than I had anticipated, the same is now true for NFLX, next up, as with the market averages' example from earlier today will be the 15 min chart, which is when/where we want to look at adding to NFLX short or for anyone who missed the original entry, the market is giving you a second chance , not at the same price level, but at a much reduced risk, better entry than just yesterday.

The point being, the 10 min chart is now deteriorating in NFLX. This is not a signal in my view to jump in NFLX short right now and here, but one that the best entry for this move is closing in.

 I had to check the shorter term charts just to be sure we are really looking at migration of the divegrence (building a stronger distribution process in to higher prices of which today is NFLX's first opportunity). The 5 min chart above puts any concerns about that aside, but even more telling...

This 1 min NFLX chart is wildly negative and in to stronger prices for the first time in the week's process for NFLX. Remember, smart money needs higher prices to sell in to and by the looks of the chart, they are doing so and in a big way. This is probably the most interesting chart as to our forecast and its progression.

The deterioration of the 15 min chart will be the most important as far as timing, but we are well on the right track and I suspect when we look back at this perhaps with conventional indicators, I would not be surprised to find those who entered NFLX long on traditional indicators may find themselves at a significant loss much faster than anticipated or able to act on, which is one of the main reasons I have maintained through these choppy minor bounces that I would not introduce risk by trying to piggy back them on the long side unless you are very comfortable with that kind of trade and risk.