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Traders Will Want to Cozy Up to Netflix Very Soon

Game-changing news combined with bullish technical outlook should vault stock higher

   

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.

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Article printed from InvestorPlace Media, http://investorplace.com/2012/12/trade-of-the-day-netflix-nasdaq-nflx-2/.

©2014 InvestorPlace Media, LLC

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