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Tuesday, July 5, 2011

NFLX


 NFLX was the breakout of the day, coming on news that they are expanding into Latin America (or something like that, I really didn't pay much attention). This particulat base is either a cup and high handle, or a base on base pattern with a prior cup and handle followed by a very short cup. In either case it is not particularly well formed. While the price relaitve line does not look bad, it also shows that except for a few brief periods this has not been outperforming the market significantly for the last few months. Volume is in a declining trend, as is CMF. This breakout may be good for a short term trade, but this has been attracting short sellers every time it moves up, leading to short squeezes. At some point the shorts will be right, we just don't know when.

Here is a look at the weekly chart. I am not very proficient at base counting, but it does look to me like we have had at least 3 bases here, and arguably 4, making this either a 4th or 5th stage breakout. Weekly volume is also trending down. We are probably getting pretty close to a top here before a major correction (this hasn't even threatened the 40 week line in almost 3 years and is overdue).

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