Netflix ($NFLX) Trading Strategy and Market Outlook March 2011

Netflix ($NFLX) has finally broken below the uptrend supports around $210-$214 and now we can expect a sharp sell-off in the stock. The next level of support comes around $190-$194. If this support gets broken, then the stock can continue with the downtrend till it falls to $150 region. This stock has witnessed a wild frothy ride from the levels around $100 and no meaningful correction came its way. This is the very reason why Netflix could see a major price correction.

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On the other hand, from a Bulls point of view, Netflix is yet to break below 50 day moving average which is currently at $200 mark and 100 day moving average which is way down at $180.

What is the best strategy to trade Netfix ($NFLX)?

One thing is certain that Bears have finally made up their mind to take the stock down, and at this point if the overall market weakens further there could not be a better time to play shorts in Netflix. Armature traders should not try hands at this stock as it can get really volatile and playing in derivatives can get extremely risky.

It’s been a long while since the major market indices have consolidated their gains, so I believe the time is ripe for an intermediate term correction. If I am right, then high-flyers like Netflix will surely be butchered.

Is the Stock Market Topping Out?

It’s not just the bubbly price action which attracts short-sellers to punish this stock. There are other issues which I have discussed in a post few weeks back. Read on to find out:

Buy Sell Short or Hold Netflix (NFLX) 2011

Warning

All the information presented in the article is by no means an investment advice. It is purely based on personal analysis and I recommend that readers to consult a professional advisor or conduct research on their own before making any investment related decisions.

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So, what is your next step?

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