NFLX was posted a about a month ago as both a quick trade idea (i had posted that i would likely take profits at the first 120 min target, which i did) but also a long-term trade ideal as a possible bottoming candidate. for those that have been scaling into NFLX as such (a longer-term hold) and did not sell or hedge before the earnings release last night, the stock still looks constructive from a longer-term perspective, at least for now.
this first chart is a 6-day period (similar to a weekly chart) which shows that today’s big drop has taken the stock back to that decade old long-term uptrend line. being this is a weekly time frame, it would be bearish if NFLX posts a weekly close (friday or maybe give it until monday) significantly below that line. this is also the original stop criteria that i mentioned for a long-term trade. zooming into this daily chart, you can see that NFLX is still within what appears to be a large falling wedge pattern with some more downside left before the bottom of the pattern. a solid break below that lower trendline as well as a break below those uptrend lines on the macd and rsi (with are strong positively divergences) would be bearish.
only time will tell if this stock is pounding out a bottom here or if this stock is headed much lower. if so, remember that bottoming, like topping, is usually a process, not an event. therefore, scaling in gradually vs. full positions are usually the best options for those looking to take a long-term position. NFLX will remain in the Long-Term Trades category until/unless stopped out as per the aforementioned criteria.
