Rising Wedge Pattern for Netflix (NFLX)
01/14/2010 12:01 am EST
With new highs being hit almost daily in the market, there has been an abundance of long-sided trade candidates. However, weak stocks are still in our midst, and it can serve us well to watch for those outliers—whether as individual profit vehicles or simply as hedges.
Netflix (NFLX) is one such stock. Not only did this one prove to be a market leader when it began trending higher a few months prior to the market turning the corner (NFLX in late 2008 versus the market in March 2009), but it’s now trending lower while the market continues to climb.
A pair of lower highs has been established since November, and currently, the stock is struggling to reclaim recently broken support. The bounce of the past few days is now starting to create a rising wedge pattern, which, if confirmed with a move back under the $52.50 area, could bring another breakdown for the stock. If it does, this one is on my radar for a play.
By Jeff White, trader and blogger, TheStockBandit.com