Take Profits On NFLX

Netflix (NFLX) has had a great run during the last couple of sessions but the charts are telling us that perhaps its time to take some profits off the table.

NFLX chart

NFLX chart

Bearish signs:

- The MACD while still showing signs of strength is losing bullish momentum at least for the moment. Be on the lookout for a bearish crossover. Typically when momentum starts deteriorating it is time to take some of the profits off the table.

- The slow stochastics as well as the RSI indicator both show signs that this name is overbought and its due for a pullback
- There is a huge gap that hasn’t been filled between $140 and $105


Bullish signs:

- 50 DMA is above the 200 DMA symbolizing that a new uptrend might be underway

Opinion:

We think it might be time to take some money off the table on this one. I would advice starting a short position at the first sign of weakness in the trend as this could be a big a move downward as it was upward. From a fundamental perspective we think this name is overvalued. NFLX was at one point trading at $300 and higher but investors soon realized the valuation shouldn’t be that high so remember the old adage “Fool me once shame on you, fool me twice shame on me”. Good luck trading, post your comments below!

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Posted Friday, February 8th, 2013 under Specific stocks.

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