Netflix (NASDAQ:NFLX) has been a great potential trading vehicle since its earnings. As an educational follow-up, I want to point out three different types of tactics to approach this name that could be used on other stocks on any time-frame.
Tactic #1: The stock saw a powerful earnings gap and provided a nice level to trade against at $139.62. The stock went higher after holding the gap, providing a great potential follow-through long entry.
Tactic #2: After earnings ignited a two-day move, NFLX consolidated for six consecutive sessions and put in a nice bull flag. During this period, the stock also held the top half of its parabolic earnings move, showing commitment. Traders could have added to their long positions above $175.
Tactics #3: After reaching very close to its major resistance of $200 on February 20, NFLX saw a small pull-back. The stock then re-tested its short-term support from prior pivot lows of $175ish today, where it held, bounced and presented a classic Red Dog Reversal trade set-up. The buy price was Friday’s low of $178.43 with a stop at the current low of $175.45. The trade has been working so far. You were risking $3 to potentially make significantly more–NFLX went as high as $186.40 on the day. It could be just a quick trade for cash flow, or it could be a nice ignited move to add some fuel to the currently rally and lift the stock up to at least the $200 level.
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By John Darsie
Disclosure: Scott Redler is long BAC, GE