I like this trade as much as I like the company. I mean, who doesn’t just love Netflix?
You have instant access to literally thousands of television shows and movies at the click of a button. Currently, I’m totally addicted to White Collar and How I Met Your Mother. With that said, Netflix (NFLX) is setting up for a great trade…and potentially a very quick one.
BOLLINGER BAND TRADE
Right now, Netflix is set up for a strategy known as a Bollinger band squeeze, or as many traders affectionately call it, “the squeeze.” This is a neutral trade and just like the preceding two squeezes that have set up on NFLX (one on 1/4/12) and (one on 7/3/12) this one could break either direction. The past two did break bullish and what a ride that was!
The bands are quite tight, showing very little volatility. Today’s candle has started to get into the band a little bit but we need to be cautionary of the 9/14/12 candle as this location could prove a short term resistance.
TARGETS
I was more excited for a bearish breakout because NFLX has been in a major bearish trend for the better part of two years. However, this trade will likely be a quick and short term counter-trend trade with our first (and potentially final) target at $65, where we have a strong gap, a resistance level and the 100 simple moving average all acting as resistance. If we get a strong close above $67.25 then NFLX could grow legs and run. We do have a small gap up on today’s candle (10/3/12) which adds weight to the bullish argument.
STAY NEUTRAL
Whichever direction this trade breaks, we have the ability to make a nice return on the move and still have a late night with friends and family while watching Ted’s epic search for his soul mate through a barrage of flashbacks and innuendos.
= = =
Looking for more trading ideas? Read our daily Markets section here.
