Saturday, January 4, 2014

NFLX Netflix Weekly Chart Overbot Rising Wedges Negative Divergence Price Extended

A television pundit is telling everyone to buy Netflx with both hands. Instead, run from it. The overbot conditions, rising wedges and negative divergence (red lines) say the top is forming, or in, and 2014 will likely be a tough year for NFLX. Remember back in 2012 everyone hated the stock, said it would go bankrupt and to avoid it like the plague. That is when Keystone said buy due to the positive divergence (green lines) and the launch occurred. Now all the same folks say to buy NFLX. What do you think is going to happen?

The MACD line barely set up with neggie d to identify the price top; this is the last piece of the puzzle. Thus, a jog move of 1 to 3 weeks is not unreasonable to place the top. It would not be surprising to see Netflix unable to make a new high but if it does, verify that the negative divergence remains and it can be shorted moving forward. Price is extended above the moving averages requiring a mean reversion. Remember, a company can be well run and a great money-maker but do not correlate that directly to price. The savvy traders entered in late 2012 and they are all likely sneaking out the back door now.

It comes in handy for television cheer leaders, perhaps in collusion with the fund houses, to pump it so it can be dumped to Joe Retail, who shows up like a sap at all these tops to hold the bag. NFLX should place its top, likely for the year, this month. Exit and take profits if long and move on, or, short the rallies. To paraphrase the young people, NFLX is so 2013. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.