i was away for most of the day but someone just asked me for an update to the NFLX long, which popped big this afternoon, up $6 before being halted and then resumed trading on news that carl icahn has a 9% stake in the stock. NFLX was recently added to the site as both a long trade setup and a long-term trade setup. the pattern triggered an entry on the breakout of the bullish falling wedge pattern on oct 4th, around 64.50-65.00. in my last update, i had highlighted how the R1 level was cleared and that level might act as an objective stop level if the stock were to drop back below it. last wednesday, the stock did indeed fall below that level, thereby likely triggering stop for more active traders. i probably should have been more specific in that last update that stops for the long-term trade (those targeting T2 or T3) would be considerably lower. my apologies for not doing so.
as often discussed, i look for a R/R ratio on my trades of 3:1 or better. on the big drop last wednesday, NFLX hit a low of 57.40, about 7- 7 1/2 points below the entry price. T2 on this trade is 86.30, or about 21-22 pts above the entry level while T3 is at 127.80, or about 63 points above entry. therefore, that wedge re-test last wednesday, although a sizable down day in percentage terms, should not have violated a typical stop for a longer-term swing trader or investor in the trade. again, my apologies for not outlining that clearly in advance on the last NFLX update although i was clear that this trade was being added as both a regular trade idea as well as a long-term trade idea in the original posts. due to the fact that many of the trade ideas posted here can be traded using either a typical swing trading holding period (several days to several weeks/month) or as longer-term swing trades or investments (several months+), the targets and stop parameters will vary considerably from trader to trader and it would be nearly impossible to cover all the various combinations & permutations of where each trader should set their stops and profits (although i do often state my preferred target and stop level). NFLX daily charts in order as posted below, with today’s updated chart last.
