NETFLIX REVIEW MARCH 22ND

I got a question about NETFLIX, so lets take a look.

This is a one month chart looking at volume by price support. The largest volume/price range was tested numerous times, $105 per share. This level thus can be considered solid support allowing upside calculations.

Stocks typically move in these intervals: Base x 1.15%, 1.25% and 1.40%.  Currently, NFLX has moved 1.15% from base. It is a 1/3 probability that this move, from the base, is now completed; leaving open the resumption of the downtrend.

If NFLX can take out 1.15xbase or $120, it becomes probable that the shares will reach $131, then $147.  The daily candles have not given any sell indicator to this point, nor have we seen any volume resistance.

Looking at a 1 year cycle, NETFLIX has just moved past FIB week 13, counting from the high in July. The next FIB ending date will be Fib week 21, week of July 20th. We can expect what ever trend NETFLIX is in, to continue into Fib week 21.

Question: What trend is it in?

Technically NETFLIX is in an UPTREND.  Not pictured on this chart, but If you look at a 3 year chart and run a 200 day mva on it, NETFLIX has retaken the 200 day, thus it's in an UPTREND until proven otherwise.

Now, here is where it gets tricky. Because NETFLIX moved from the high above $300 a share, almost nose diving to the most recent low of $65-this leaves 2 unresolved problems.

Problem: 1--We are not able to count with any certainty, the typical EW 5 wave bear move into completion; there just isn't enough time lapse and distinctive waves.

Problem: 2--Even though the shares have retaken the 200 day average (which is technically an uptrend), the retrace of the $300 to $65 range is well within normal BEAR MARKET retraces.

We would expect the retrace to be able to do 38%, which would be $147, or 50% from the low, which would be around $170.

Given that the retrace HAS NOT BEEN ABLE TO DO the first target of 38%, $147, this is a fairly weak retrace. The current up move could be a 5 mini wave move to complete a standard 38% retrace, not a NEW BULL MARKET MOVE.

In this light, IF THIS IS ONLY A RETRACE, it points to much, much lower share prices.



Conclusion:

The bounce off the $105 level with volume support was an easy set-up catch. The stock bounced 5-7xs before making its move, giving plenty of time to enter. The upside targets of 15%, 25%, 40%, again are easy figures to trade into. Which means 1/3 of the easy trade has now passed, maybe all of it.

Was $65 the multi generational low of a lifetime or just the 1st leg down in a 5 wave bear move?  This is the question that has to be confirmed beyond doubt, in order to take a long term investment into shares of NETFLIX. Right now, I DO NOT HAVE THE ANSWER to that question.

Given my expectation of a broad market pull back, the fact that we went into FIB week 13 declining, and the shares have not been able to retrace above 50%, which is $170, there is not enough clear direction evidence to risk being long, without proper PUT OPTION protection or trailing stops.

I'm willing to set this out until the completion of FIB week 21, ending week of  July 20th, before considering a position. This gives both the broad market indexes and NFLX time to sort out direction.

RISK/REWARD ratio of possible $20 higher from here, verses $100 possible DOWN is just not favorable. The are better odds to be had somewhere else.

Tim Kathlina

After The Bell-NETFLIX Mid Day Update NFLX Jan 18th

On Jan 12th I noted a Bullish Doji that made a successful test of the zero number 90. The DOJI was confirmed by the positive price appreciation follow thru the following day.

Today we get this from Analyst:

FORBES

Netflix: Bernstein Cuts Target-Sees Slowing Sub Growth

Bernstein Research analyst Carlos Kirjner this morning chopped his price target on Netflix to $71, from $79, well below yesterday’s close at $94.72

The market got word of this downgrade prior to market open. The stock has fought off this news and is now positive. The shares have formed a bull flag while trading against a spike.

Conclusion: NFLX shares continue to exhibit bullish trends despite market attempts to keep the shares down. Shares have formed a bullish flag against a negative backdrop of analyst downgrades.

I continue to believe the turnaround is on the way and expect the shares to reach $150 to $200 over the next 3 months.

Tim Kathlina

AFTER THE BELL-BULL AND BEAR DOJI PATTERN SET-UPS JAN 12TH

DOJI:
The appearance of a Bearish/Bullish (Doji) Star Pattern in an uptrend/downtrend shows that buyers/sellers are now losing control and the market is moving to a deadlock between buyers and sellers. This deadlock or balance between buyers and sellers may result because of a diminution in the buying force or an increase in the selling force. The star tells us that the strength of uptrend/downtrend is now dissipating and the market is increasingly vulnerable to a setback/advance.

Conclusion: These patterns require follow thru confirmation. Note however, Transports, large caps, mid-caps are all backed up by low RSI<2> readings.

As noted in yesterdays Semiconductor post, I believe Intel earnings report will bring in a short term top of some sort. Either an exuberant exhaustion style high, based on good numbers, or a disappointment ceiling, based on bad numbers.

The question remains, will this be the high of the year????? Not sure yet.

Tim Kathlina

After The Bell-NETFLIX-Brand Names Beat Down List Update Jan 3rd

NEW YORK (TheStreet) -- Netflix(NFLX_) is ramping up its original content, announcing the premier of the series Lilyhammer in February

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 >



Daily chart, possible breakout above $73

 Here we have the weekly NFLX chart showing calculated upside targets. Should the trend change hold, one can expect the 1st stop to be around the $110 level, mid-range of Boillinger Band. With ultimate destination $200 or more.

Weekly Chart, long term retrace potential

Conclusion: NFLX seems to offer a good trade option in the short run, month of January, for some fast profits.

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