NFLX is a $5.7 billion consumer discretionary company that provides online movie rental subscription services in the United States. NFLX has been one of the best performing stocks of 2010. Recent weakness, however, has brought NFLX back to reality, briefly trading beneath its 50 day SMA on Thursday before reversing in afternoon trading and finishing just above that key moving average. The reversing hammer candlestick leaves NFLX at a level where its reward to risk is quite solid. The big question mark relating to NFLX's near-term performance deals more with concerns we have with the overall market. A recovery in the major indices almost certainly would lead to rebounding strength in NFLX. But further downward pressure in the market as a whole might find NFLX longs holding the bag as so many other longs have had to experience in recent weeks. If NFLX bounces, look for 118-119 to act as significant short-term price resistance. To the downside, any close beneath the 50 day SMA should be monitored closely, especially if volume is heavy.
Watch the Video Chart and commentary for NFLX