Netflix (NASDAQ:NFLX) — I’ve recommended this stock several times this year, making profits before its gap down in early April. The stock plunged from $130 to the low $50s late this summer due to management’s poor implementation of a new pricing strategy. But in early September, the stock began forming a saucer (rounding bottom), which is a long-term bullish formation.
On Tuesday, Netflix executed a “game changer” on news that they would be the exclusive U.S. subscription TV service for first-run live-action and animated feature films from Walt Disney (NYSE:DIS). At the same time, Sony (NYSE: SNE) said that their PlayStation3 is the world’s most popular device for showing movies and TV shows from Netflix.
The break from the saucer provides a short-term trading opportunity to the top of the open gap made in early April at $90 to $101.79. I’d prefer to buy NFLX under $80 for that trade, but long-term investors may want to go for this hot issue now, at the market, for the potential offered by this combination of leaders in the world of household entertainment.