Simplistic Technical Analysis for NFLX (November 8th 2014)

Last week, I had predicted that Netflix was going to go higher. More specifically I had predicted the following...

1. Netflix will rise to $400 by end of next week and continue to 410-415 for the week after.

2. Netflix may test $425 for the week after, but will revert to 410 or so within a 4 week period.

In hindsight these predictions did not turn out to be true for primarily two reasons.

1. As per my fundamental analysis, the stock was already trading near its intrinsic value of $390.

2. From a technical analysis, the bollinger band had contracted perhaps and the stock was touching the top.

This week again, we are again looking at the 6 month candlestick chart for Netflix on Yahoo stocks. The following indicators have been added to the chart.

1. Bollinger Bands at 20 days and 2 Standard deviation

2. 20, 50 and 200 day Simple Moving Averages

3. MACD indicator for 26, 12 and 9

4. 14 day Money Flow Index 

If we look at the charts this week, we can see that the stock has trended down after touching the top of the bollinger and has also reflected from the bottom by the end of the week (highlight 1). From a MFI perspective, the stock is not overbought as yet at 62 odd. MACD divergence (highlight 3) has marginally moved to positive territory, while MACD and signal are very much in oversold territory. Crossing the 20 day and 50 day SMA is a trigger for the stock to move higher and is liked by the bulls. So expect some upward tick if the stock crosses these thresholds.

Here are my short term amateur predictions for the week.

1. The stock will end the week at the upper Bollinger at 394. 

2. It will reverse to below 390 the week after and then get pushed to around 405-410 around three weeks from now.

These are amateur predictions so please do your own research.