Proving Netflix's Guilt

After earnings, glamorous market leader NFLX is down more than 7% as I write this. To my eye, sentiment is becoming something of a stalemate, with plenty of Netflix skeptics for a good while now balanced out by those who believe the firm is just getting started with its international and original content growth campaigns and disruptions.

Of course, the firm could always be bought out, which is a risk to any short. But, then again, if Netflix has yet to be bought out in the legendary low-rate/prior-QE environment, thus far, perhaps that is a sign the company will be one of those always-a-bridesmaids-never-a-bride names (not that it needs a buyout, per se). 

At any rate, circling back to the weekly chart, below, the sheer size of weekly price candlesticks has been increasing dramatically, perhaps indicative of buyers losing their grip on this market growth leader. Over time, and after a multi-year uptrend, those wild price swings tend to favor bears for a major trend reversal lower. 

But cracking and, more importantly, holding below $100 is a very necessary first step for bears. And even that, while necessary, is not sufficient for a trend reversal, for we would need to see the August lows of $85.50 undercut to really think a fresh downtrend is in place.

Perhaps just like Pablo Escobar himself in the Netflix original series, Narcos, catching NFLX and proving its guilt remains an elusive task for bears. But, clearly, NFLX is feeling at least some heat now and may start thinking about hiding out in one of its many mansions.