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Netflix CFO change… Candlesticks For Objectivity

December 9, 2010

Netflix (NFLX)I have no advice for you. I am not a trader and do not look at the market day to day. I do however look at long term trends which helps me put a stake in the ground and wait to be proven right or wrong. Use the tools you know best. My dad swung a hammer for a living. That was his tool. So when I look at candlestick charts, I tend to see the motion of hammer swings. Such is the case when I look at a chart of Netflix (NFLX).

Now NFLX has been doing really well since the start of 2009. This is almost a year after the beginning-of-the-end of the job market, which appears on ADP charts as about the start of 2008, when homebuilders were in full swing of reducing staff for a failed year of home sales in 2007.

Most investors don’t really pay attention to economic conditions, focusing only on earnings results and not caring what contributes to those results. Certainly, economic conditions, technology opportunities and corporate actions are a complex mix. For NFLX, the earnings pattern has been to increase every year around the second quarter and then remain mostly steady for the year. Revenues have had a nice steady increase quarter over quarter. The stock rating itself appears to be more a factor of analyst popularity than anything else and the announced departure of the CFO will be something to watch for the effect on ratings.

In any case, the 10x climb for Netflix from about $20 in 2008 to about $200 has been quick. On a monthly chart you can see that at $100/share NFLX rested during its hammering climb and again at $200/share, NFLX has paused and retraced slightly to $182/share. It’s often hard to tell how tired the man with the hammer may be. However, once the $165 price was passed the next stop on the Fibonacci train should be around $255/share. On a weekly chart, you can see the hammer swings.

Employment has been slowly growing over the last 6 months according to BLS.gov and even ADP is showing the rise. History shows that the market does better under Democrats, although no one has successfully explained that. We have some time yet before we have to worry about the next presidential election, so there is ample time for a blow-off peak in NFLX if there is going to be one.

Well, that’s all for now as I need some time with my French curve for the really long term look, but that’s another story. If you are looking for some good sources about candlesticks trading, I suggest that you start here:

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4 Comments leave one →
  1. January 9, 2011 10:26 am

    Thanks for checking out my blog wordlinks. Netflix has to be one of my favorite sites on the net. I have had my account for about 3 years. I have watched more movies that are unavailable to in other rental outlets like blockbuster or hollywood video. Their catalog is just so deep. I hope they stay around for a long time.

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