Sometimes the market plays like a version of Fast & Furious. But rather than get mad, investors should focus on making profits and leave the ego in the rear view mirror. And right now, the Netflix (NASDAQ:NFLX) stock chart is telling bulls to move over and let the bears take the driver’s seat. Let me explain.
I’ll admit it, I was bullish on Netflix stock not so long ago. In fact, just a few sessions ago I wrote up an overall upbeat assessment on the company and how investors were in position to purchase NFLX shares with less risk and increased profit potential. Crash and burn!
In a nutshell, caution at the time wasn’t thrown into the wind. Still, the streaming video giant’s top (and squiggly price) lines outweighed hazards such as NFLX’s rich price multiple, storied and growing cash burn and ever-apparent competitive threats from the likes of Apple (NASDAQ:AAPL),
Walt Disney (NYSE:DIS) and others. And again, I was wrong. Well, at least as far as the Netflix stock chart is concerned.
I still view Netflix as a buy … for the right price. But as a trading vehicle in today’s volatile market, it’s time to get past the mental roadblocks and let a bearish bet on Netflix stock be your road to profits in the short-term.
Netflix Stock Weekly Chart
Rather than steer clear of price action that has been maddening for investors, the big picture of the weekly chart points to getting back in the driver’s seat … as a bear.
The same daily chart price action which stopped our previously discussed long in Netflix stock has formed a confirmed weekly chart hangman pattern candlestick. The price action is bearish in its own right. But combined with an overbought stochastics and shares failing at the less-followed 76% Fibonacci retracement level, it looks even worse for NFLX bulls.
And with Netflix stock also running into price resistance at a pair of key topping candles during NFLX’s late 2018 market correction, the situation looks well-situated for investors placing short bets today.
My technical takeaway is we’ve just finished watching the first part of a large “W,” or double-bottom, base in NFLX shares. Bearing this in mind, the weekly hangman is a mid-pivot high that preceeds another corrective leg.
If we’re correct, Netflix investors can expect a challenge of the December low in the coming months. And bottom line, even if you harbor longer-term bullish designs on NFLX, the current technical risk tied to the mid-pivot means big profits for shorting Netflix stock today!
Investment accounts under Christopher Tyler’s management do not currently own positions in any securities mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional options-based strategies, related musings or to ask a question, you can find and follow Chris on Twitter @Options_CAT and StockTwits.
