{"id":20156,"date":"2013-10-22T20:56:53","date_gmt":"2013-10-23T03:56:53","guid":{"rendered":"http:\/\/drduru.com\/onetwentytwo\/?p=20156"},"modified":"2013-10-22T21:01:19","modified_gmt":"2013-10-23T04:01:19","slug":"chart-review-netflix-topping-action-redux","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2013\/10\/22\/chart-review-netflix-topping-action-redux\/","title":{"rendered":"Chart Review: Netflix Topping Action Redux"},"content":{"rendered":"

On September 23rd, I noted a bearish engulfing pattern on Netflix<\/a> (NFLX) that seemed to indicate the stock was finally printing a top. At the time I warned as well as noted the following:<\/p>\n

“Mind you \u2013 this technical call is no slam dunk. NFLX has had a stellar year with multiple up gaps and now a very smooth uptrend since the July lows. It has been a remarkable turn-around from an ugly close to 2011 and a 2012 which broke 2011\u2032s low after a fake-out rally earlier in the year. Netflix\u2019s bottom was essentially secured by a timely investment by Carl Icahn in November, 2012…<\/p>\n

…At some point, investors who have captured these nice profits in NFLX will sell. Even Icahn must be licking his chops by now with NFLX\u2019s valuation back to the sky high levels of 90 forward P\/E, 4.7x sales, and 16.7x book. Trailing P\/E is 376. I think it is safe to say the minute word gets out Icahn is selling, NFLX will plunge like a rock. This likelihood alone should motivate Icahn to completely liquidate once he does sell. In the meantime, insiders are happily unloading stock into these stratospheric levels.”<\/p><\/blockquote>\n

NFLX never confirmed the bearish engulfing pattern as the downward momentum stopped on a dime, so I never made a trade. The stock resumed its upward surge and made new highs for the year before renewed pressure took NFLX down to a successful retest of its 50-day moving average (DMA). This brief pullback delivered very belated selling pressure. From there, it was a rally into earnings that included an ominous 6.4% leap to fresh all-time highs before NFLX announced earnings. That surge seemed to indicate that someone “knew” something about earnings. Sure enough, NFLX soared in after-hours trading as much as 10% or so on more investor\/trader excitement.<\/p>\n

But what has followed looks like topping action redux. NFLX gapped up at the start of regular trading a healthy 9.3%, but it was all downhill from there. By the time the carnage ended, NFLX had printed a monster bearish engulfing pattern and a -9.2% close, a mirror image of extremes. This is the worst post-earnings fade I have seen in a very long time, maybe ever.<\/p>\n


\n
\"A<\/a>
A major topping pattern for NFLX<\/figcaption><\/figure>
\n<\/center><\/p>\n

This action is so dramatic, I HAVE to show the intraday action. It has all the look of a major seller who wanted to lock in profits in a hurry. Perhaps this is the exact kind of selling by none other than Icahn that I referenced above?!?<\/p>\n


\n
\"Judging<\/a>
Judging from the trading volume, some big seller(s) got out of NFLX in a hurry.<\/figcaption><\/figure>
\nSource of charts: FreeStockCharts.com<\/a><\/strong>
\n<\/center><\/p>\n

Sure enough, after the close of trading, Icahn posted THIS tweet:<\/p>\n

\n

Sold block of NFLX today. Wish to thank Reed Hastings, Ted Sarandos, NFLX team, and last but not least Kevin Spacey: http:\/\/t.co\/BRWpKOBfD2<\/a><\/p>\n

— Carl Icahn (@Carl_C_Icahn) October 22, 2013<\/a><\/p><\/blockquote>\n