Most of April I really liked what I saw in NFLX for a long play with a dip below $300 to go long, but make no mistake about NFLX, as far as a longer term trend position goes, I have not a bullish bone in my body, it remains a core short position that I'd like to add to.
The idea behind a NFLX bounce that should have better relative performance than the market is that it would also set up a better long term core short position and that's what I'm looking for now./
Here are the charts...
This is the 4 hour NFLX chart from in line with the uptrend to leading negative distribution in to the top to a leading negative signal currently, any bounce barely shows up here because in the big picture, it's little more than a normal counter trend bounce that you see in any asset that's in a bear market or primary downtrend or even moving that way, it's just not where the probabilities are.
On a 60 min chart zoomed in we have nothing of interest here, no divergences or anything that would cause me to get excited about NFLX, if I had to make a decision right now on a position I'd go short and stick with it as the probabilities are highly skewed in that direction, but we have better data than this.
On a 30 min chart I highlighted April, you can see why I said so many times that NFLX has been one of my favorite long ideas to outperform the market on a relative basis for "Most of April".
However, since the last post for the last significant set up, a move below $300 (as it is a psychological level/centennial number/whole number) to set up a long position, which I would have expected to spend some more time below $300 and set up a reversal process, instead it hit the stops and orders at $299.50 and then made its move, since then, there have been no significant divergences that I would be interested in playing until the short set up is ready.
With faster charts we get more details, often more noise as well. This 15 min chart shows the first significant positive in April, a negative bringing it back down and really not another "significant" divergence on a 15 or 30 min chart as far as long positions go. Last week there was a negative divegrence which we'll see more closely in a minute.
This is the 10 min chart, this shows the long set up that would be "BELOW" $300, it wasn't there long, less than a day and just hit the orders like AAPL hit them right AT $600, NFLX hit them at $300 with a low of $299.50 on the day.
While this is a 510 min positive and can be traded, it's not a 15 or 30 min positive. Since, we haven't had any significant divergences and as such I'm waiting and looking for the next set up, short and on a trend or core position basis.
This is the closer look at the negative divegrence last week, a range formed which became very obvious which means, "expect a head fake move before a reversal to the downside" as 3C was clearly negative through the range. We got the head fake move and then a reversal from about $347 to $315 pretty quickly.
On the 5 min chart we have two smaller positives you can see, this isn't surprising given the $102 USD/JPY level so near by and the probability of it being hit and dragging Index futures and the broad market with it, that happened this morning. You know what we are looking for above $102, distribution in the FX pair and thus in the broad market and assets like NFLX.
Note the small leading negative divegrence today in NFLX.
The 1 min chart gives us a better view of the intraday action which
is EXACTLY what I want to see to set up the next position in NFLX, that's with the probabilities, short on a larger scale or trend/core position basis.
I sometimes will switch to the blue 3C for NFLX and some other momo stocks in a faster moving market as it moves faster than the orange version, although I like the orange version better for trends. For example, the same 1 min chart in the blue version...
There's some difference in the look, but not at important areas. Where we have an intraday range ( a place we often see a lot of underlying movement), 3C is giving the EXACT same signal, leading negative.
The 2 min chart gives the exact same signal at last week's range and head fake area and the reversal as well as the smaller positives.
And the 3 min chart is similar to the orange 5 min chart with distribution in last week's range, at the head fake before the reversal, small positives and a leading negative through today like the intraday and 5 min charts above.
I want to see the charts from 5-30 and maybe even 60 min give VERY clear negatives for NFLX before I jump or add to a core short position, let it come to us and once again, what the market does and what the USD/JPY do as well as NFLX itself will be very important in determining the timing of the entry,
but I can tell you with about 95% certainty that there will be a head fake move BEFORE the downside reversal, THAT'S WHERE I'D HOPE TO BE ABLE TO TIME MY SHORT POSITION ENTRY FOR NFLX.
