Clicky

NFLX AAPL Deja Vu

NFLX (Netflix Inc.) is soaring in after-hours trading following their quarterly earnings release. When I look at the weekly chart of NFLX as well as the price & volume action along various technical indicators, I see some almost uncanny similarities between NFLX today and AAPL when it put in a major top back on April 28th, 2015. That top in AAPL was followed by a vicious bear market that wiped out over 1/3 of the value of that over-loved & over-owned stock over the next 13 months. Just as with NFLX today, that pop & top in Apple didn't come following a disappointing earning release or horrible forward guidance. On the contrary, earnings were great & the stock soared in the after-hours session on April 27th with that rally carrying over into the next trading session, with AAPL gapping higher.

That opening gap to new all-time highs in AAPL marked the start of one of the worst bear markets that the stock had experienced in over a decade. The post-earnings induced opening gap was immediately faded with the stock never looking back. As I had covered in detail that day that AAPL peaked in 2015, the stock finished the day (April 28th, the first trading day after the earnings release the evening before) printing a bearish engulfing candlestick which was followed through with the additional downside (i.e.- confirmation of the sell signal) in the following trading sessions.

AAPL daily April 28th

AAPL daily April 28, 2015

NFLX has been posted as two official trades recently. The first short trade was entered about 5 weeks ago & quickly hit the final target for a quick (4 trading sessions) gain of 10½% on June 15th. NFLX was once again added as another short trade one week ago on the backtest of the recently broken uptrend line & went on to exceed the suggested stop of any move above 159.50 on Thursday for a loss of 4.5% (that trade will now be re-assigned to the Completed Trades category).

Just because the current technical posture of NFLX, including what is almost certain to be an opening gap higher tomorrow, nearly mirrors that of AAPL back in 2015 does not mean that the Netflix will continue to follow the same path that Apple did back then. However, I will certainly be monitoring the stock closely in the coming trading sessions for any high-probability sell signals such as those highlighted on Apple back then in this post.

1+
Jul 17, 2017 6:51pm|Categories: Equity Market Analysis|Tags: , |7 Comments

7 Comments

  1. stock51 July 17, 2017 7:01 pm at 7:01 pm

    Thank you

    0

  2. GetItRiight July 18, 2017 11:25 am at 11:25 am

    NFLX it’s not fading today, it’s accelerating to the upside and dragging the Qs with it.

    0

    • rsotc July 18, 2017 12:14 pm at 12:14 pm

      No fade, no trade. Even if it had closed the gap today & printed a bearish engulfing candle or some other type of potential reversal stick, we would need to see one or two follow-up red closes to confirm the signal, at least in my book. Either way it looks like NFLX will print a solid green close today so we’ll just have to wait & see how the stock trades in the coming days & weeks.

      0

  3. jamesp July 18, 2017 12:57 pm at 12:57 pm

    bit off topic randy but im having trouble getting the instant email alerts, any suggestion on where to change those settings?

    0

    • rsotc July 18, 2017 2:21 pm at 2:21 pm

      I just sent you an email with specific instructions but here they are for anyone else interested:

      After logging into the site, you should be redirected to the Welcome page (if not, let me know). Click on the first link on the right of the page labeled “Configure Email Notifications”. From that page, select the categories that you want to receive email notifications immediately as a post is made on the front page assigned to those specific categories. See attached images.

      There are a lot of check boxes since there are parent & subcategories. E.g.- Checking “All Trade Setups” should provide an email notification for any posts in the following categories: Long Swing Trades, Short Swing Trades, Growth & Income Trades & Long-term Trades.

      Occasionally, certain email providers will not pass along emails sent from the site as they mistakenly identify it as spam since many emails are sent out in batches in short order. I haven’t heard of that issue in quite a while but you can check with your email provider to verify (after first checking your junk mail folder). Let me know if you have any questions or issues.

      P.S.- The are also several options to receive email notifications from certain trading room activities such as posts assigned to certain groups, replies to your posts/comments, etc… I can send you a link with instructions if you are interested in those.

      0

  4. malejandro1972 July 18, 2017 6:17 pm at 6:17 pm

    Randy,
    I know it is reaching, but NFLX on a weekly basis seems like it would have to continue to rise considerably in order to negate the negative divergences that are currently in place since?

    0

    • rsotc July 18, 2017 8:32 pm at 8:32 pm

      Actually, that’s not reaching at all; the divergences on the weekly time frame are still very much intact & not even close to being negated at this time, despite the big rally today. In fact, even the negative divergences on the daily time frame are still intact as well, with both the PPO, MACD, RSI & some other indicators still below their late Oct reaction highs at this time.

      There aren’t any sell signals on NFLX as of today’s close but today’s gap could prove to be what is referred to as an exhaustion gap with the Oct 18th gap being a break-away gap & the Jan 19th & April 25th gaps being continuation gaps. I’ll be keeping an eye on NFLX to see how it trades in the coming days & weeks… can’t short it here but wouldn’t go long either as the R/R is extremely unfavorable at this time.

      0

Leave A Comment