Why was NFLX down when the markets were up big Wednesday?  If you are trading trend channel support and trend channel resistance, you don’t need to ask that question.

Monday and Tuesday our standout stock was NFLX — Netflix. But here is the catch, it is trading at trend channel resistance now and we would rather lock in gains which is a lot different that what bus chasers are feeling.

We bought the options at 23.15 and we cashed out Tuesday at 54.60 for a gain of 136%.  Why did we cash out?  Simple, just look at the chart.


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There is an old saying bulls make money, bears make money and pigs get slaughtered. Normally in the case where a stock is trading at trend channel resistance after a big run, we’d at least sell off half the position.

So what we did Tuesday is walk away and lock in our gains in the OPTION and NOT the common stock.  If you have a few hundred shares or whatever taking some off the table here would be a prudent thing to do. Nobody said you had to get rid of all of it but we were all smart enough to buy it at the exact right time so let’s not be pigs about the situation.

If it goes higher? If it turns into a DECK? Well then we still have some in the form of common stock. While on the subject of DECK — Deckers, there is no way you can’t tell us that this isn’t a climax run on the stock. You have got to be out of your mind to be a buyer here. Of course the climax run also is the beginning of the end to that stock much like a capitulation sell off only flipped over.

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Looking for another NFLX?  Take a look at BIDU:


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This issue is tracing out a bullish Pullback Off Highs pattern as shown by the pink line.  It is pulling back while remaining above support at the 50-day moving average and its trend channel (green line).  A crossover of the pink line to the upside gets the ball rolling for a potential retest of its highs and another great return on the options trade.

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