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Tech

Netflix (NFLX) : Trade what you see.

Netflix is a good example that if I trade based on my beliefs, I will be losing quite a fair bit of money by now.

NFLX just announced that it has entered into an exclusive agreement with EPIX for their media library for distribution via the Internet. That itself is a good example of NFLX market leadership despite my view that it will face problems growing outside of US.

However, just because I have a bias doesn’t means the market will react according to my views.

And in fact, the saving grace for me is I stopped my short when NFLX rebounded off $95.

I tried to look for good short entry near the kumo resistance level on the daily chart but NFLX bullish move is extremely strong and bulldoze all the way up and just today alone, it was up more than 7% on the news.

The strong bullish momentum save the day (for myself). If the momentum has been weak and it has shown signs of slowing down or reversing when it hits the kumo resistance, this positive news will have a huge impact on my positions.

I consider this a blessing in disguise and a reminder to trade what you see. Sometimes, we hold on to our views for far too long without accepting that things have change. Imagine the damage done if I have continue to short NFLX at every resistance level!

Again a reminder: Wait for the setup. No SETUP, No TRADE!

Note:

Having said that, NFLX is back near its 52 week high. Watch the chart and act accordingly.