The usual then – Jan. 25, 2013 – and now;
NFLX is behaving as expected. Today’s action smells like a thrust from a triangle wave 4. A little over 200 is the target but all the gaps on the way down (there are two) are now closed so it is important not to outstay your welcome. On balance a sell.
Then (a year ago) and now charts;
If you read the actual blog from Feb, 2012 you will see that we expected the b-wave to go to about $90. In actuality it went to a little more than $50 to become an irregular b-wave. The moon shot of the past few days, after an expected 13 cents loss turned out to be a 13 cent gain, should go a little further just to close the gap on the way down and to make a 62% retracement. This stock is a good example of why so many investors have fled the scene. This is total nonsense and only gamblers can play this stuff or very large professional outfits which is the same thing. We think this might be a sell again once it gets marginally above $200, a little further than we initially anticipated.
Back in Oct. last year we recommended buying NFLX back if you were short at $75. The stock did drop a little further to $62, less than the $20 or so that one might have expected but still pretty close to the lows. The stock has in the mean time gone up about $50 or some 70%. There are now clearly 5 waves up so it would be a good time to step aside. One possibility is that we are halfway in an a-b-c correction. If so the b should take the stock to about $90.
The direction is not at all surprising but the speed at which it is doing it is very impressive. It is down 74% from the highs of four months ago. By some metrics one could argue that this is enough, for instance the “gap in the middle” concept would put the low at around today’s low of $75. The problem with that is that it is impossible to count the slide down as 5 waves, nor is there a clear a-b-c down. At the very least we should see the stock price closer to the lower trend channel line. Another $20/30 would do the trick. If short buy it back now, just in case.