We keep a list of beaten down Brand Name company stocks, these make the best turnaround 1000% gainers. NFLX has had a tough year based on one simply ill advised move by the CEO to try and unlock additional shareholder value, by separating out the dying, but very profitable DVD business from the future streaming business.
As a personal note, I don't own a DVD player, but am a Netflix subscriber. I get my NETFLIX via Roku2 box. The Roku box has 400 apps on it and works over a wireless Internet connection. DVD is a thing of the past and will go the way of the VCR.
NFLX daily chart is noted on the left volume by price. What we are looking for is evidence that the drop from over $300 a share to $70, represents a good value to someone with enough money to support the shares. It appears that $68, has proven to be a line in the sand for institutional investors.
Notice at $68, the largest volume of transactions have taken place. We can now count this as support because the shares have tested and held this level 3xs. It appears that supply is being absorbed at this level.
Second notice the Slow Stochastic did a negative K/D cross 2xs in December, but $68 price level held.
Looking at Call Option Open Intrest for the January 20th expiration, the largest amount of contracts is at the $82 strike price level; which on the Daily chart is around the R2 calculated price. This call option strike is trading up almost 40% today.< http://finance.yahoo.com/q?s=NFLX120121C00080000 >
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| Daily chart, possible breakout above $73 |
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| Weekly Chart, long term retrace potential |
Long term, it will take time to win back customers and gain traction on overseas expansion. However I feel like the shares are the future of streaming TV and expect NFLX to achieve a BIDU or GOOG type lofty status with investors. I'm am averaging into NFLX slowly, using monthly dips as buying opportunities.
Tim Kathlina
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