Netflix (NASDAQ:NFLX) — On Sept. 2, when the stock was at $213.11, our “Top Stocks to Sell in September” said that the company was “in danger of losing market share to other streaming video services… Technically it broke its 200-day moving average… Sell into strength.”
The stock fell to under $62 after our sell recommendation. But after the close yesterday, Netflix surprised Wall Street analysts by earnings 73 cents a share when they were expecting 54 cents per share.
The company has undergone many changes since the backlash from customers against a change in its pricing policy. The stock is still in a transition period, but the better earnings and a huge expansion overseas should help to turn the price higher.
This is a “bottom-fisher’s” stock with the risk that another stumble could again turn the stock lower. But the better-than-expected earnings pushed the stock higher during post-market trading yesterday, and so buyers should wait for a pullback to $96 or lower rather than chasing it.
Note the upturn on the fast stochastic’s fast line, indicating that a quick trade may be available. The short-term target is $120, but longer term, if its new plans are successful, NFLX could reach its 200-day moving average at around $175.
