Let me start by saying that I give Netflix a lot of credit. The company has 66 million subscribers in 81 countries. If we ever attain world peace it will be in large part due to companies like Netflix. Seriously.

It’s the most disruptive media company in the world because it is an affordable, non-commercial vector for progressive social consciousness. Repressive regimes around the globe should be frightened of the mind shift that such programming can engender in a population being held captive in a time capsule. Once the temporal genie is out of the bottle, it cannot be forced back in.

That said, the stock has a major problem. Volume Profile shows the historical price levels at which buyers and sellers transacted business. The amount of volume at various price levels is significant. These areas act as support on the way up and as magnets/targets on the way down.   

The Volume Profile for NFLX paints a precarious picture… a House of Cards, if you will. While $98 is a support level, along with $94, below that, things get dicey.

Reid-NFLX-10.18.15.png

A small gap around $83 begs to be filled, but the important target is the large gap at $69-$74. It would be fortunate if NFLX stopped there, and it might. But there is additional risk to $54, the Volume Profile Point of Control.

Only about 8% of the float is short, which means there are relatively few NFLX bears. The trailing P/E ratio of 263 and a profit margin of 2.5% are also of some concern. It means shares are priced for perfection. 

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