Given Monday’s enthusiastic market sell-off, I would like to offer a quick follow up to the article I wrote yesterday on Netflix (NFLX). Monday’s dramatic down draft pushed shares of NFLX slightly below its downtrend line, negating the recent breakout, at least for now. Consequently, a correction in NFLX may be starting.
As individual investors, it is a fortunate occurrence when we are offered a dip in one of the market’s strongest stocks. It usually takes some degree of market panic for that opportunity to arise, and it may arise sooner than later in NFLX.
In the chart that accompanies this article I indicate what I consider an attractive technical “buy zone” for the stock based on Volume Profile. Volume Profile shows volume at price, rather than time. Price zones with high volume act as support and resistance; support when price is above them and resistance when price is below.
If the overall market continues to show weakness, the High Volume Node between $98 and $102 represents an area of anticipated support. While I do expect this zone to hold, if the general market turns downright ugly, then $94 may come into play for NFLX. This is a critical level that may act as a price magnet in stormy conditions.
Bottom line: We may soon have an opportunity to pick up shares of NFLX at a discount.
www.daytradingpsychology.com (Assistance for private traders.)
www.trader-analytics.com (Peak performance consulting to RIAs, hedge funds and banks.
