Is it Safe: Update on Netflix

Much like the other "FANG" market leaders, and even the long-term chart of the Russell 2000 small caps we looked at earlier today, the Netflix chart is such that we still are not too interested in calling major bull marker tops. 

At the same time, though, we simply cannot be surprised if a chart like NFLX decides to take some time and correct, resetting a steep multi-year uptrend. That may be frustrating indeed for weekly options traders in this day and age of rapid-fire brokerage apps and social media.

But the reality is after its latest earnings selloff, Netflix did not immediately recover to new highs even after intraday/day-trader longs successfully bought the post-earnings initial gap down.

Since then, NFLX has essentially drifted lower, as swing traders who respected the "Three Day Rule," as we have discussed quite a few times here and for Members, successfully avoided buying back in to NFLX too soon at $385 last week. 

On a positive note, Netflix of course remains in a ferocious overall uptrend and is an undisputed growth leader in the broad market. Moreover, NFLX never lost the $340 level, highlighted on the daily chart, below. As you can see, the $340 level has been a fairly important one for the chart dating back to the late-winter and spring months. 

Netflix is green today on uninspiring volume, in front of FB earnings tonight and AMZN tomorrow. We continue to use the 50-day simple moving average (dark blue line, currently at $375) as a good reference point to consider going long the name. 

For now, Netflix has all the hallmarks of an explosive leader undergoing a garden-variety summer pullback with evidence yet of a top, though more patience may be required before the stock commence a fresh leg higher.