Saturday, January 14, 2017

NFLX Netflix Monthly Chart; Overbot; Rising Wedges; Negative Divergence

NFLX has been a volatile stock in recent years. Price has come up for a higher high with negative divergence across all indicators. The stochastics are overbot. A spankdown would be expected going forward.

The collapses from rising wedges can be quite dramatic. To add more drama, the bands are squeezing in tight for a big move to occur (but tight band squeezes do not predict direction). The assumption would be a thrust downwards due to the chart. However, it can be saved if Netflix makes an announcement of some sort, or perhaps big earnings beat, or other news event that causes sudden excitement. Lo and behold, Netflix reports earnings this coming week.

The chart says NFLX should roll over to the downside and trend lower on the monthly basis. Watch to see if the ADX falls below 30 as that would verify the downward path for price ahead. Do not get caught up in the Netflix hype.

Price has violated the upper band so the middle band at 107 is in play and the lower band at 80. The bands are pinching in so price will likely top out in this 133-ish area. Price is extended above the moving averages and needs a mean reversion lower. Price is overbot and the indicators display universal neggie d. The red rising wedge is ominous.

You do not want to own this stock. If long, it is likely prudent to scale out going forward and just let that money sit to the side in cash. With price at 133, it is likely that the multi-year top is printing right now. There may be a jog move, down now, up in February, then roll over and down in March, however, this chart is so sad looking the expectation is that Netflix begins a long multi-year track lower from these levels at anytime. 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.

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