Netflix Added To Model Portfolio As Investors Buy On Weakness (Technical Analysis)

Summary:

• Investors are expected to be buying Netflix, Inc. stock on weakness after a price pullback, with a strong buy signal at 90 out of 100.
• The price is dropping and targeting a test of support at $610, with traders and small investors waiting for signals to turn up.
• Netflix, Inc. is on our Earnings Pop Watchlist with strong buy signals in the SID, Fund, and Tech columns.

As you can see on the chart below, investors rushed in to buy Netflix, Inc. (NASDAQ:NFLX) stock on weakness after the last, big pullback to $544. Now, the price is pulling back again, and our SID score is a strong Buy signal at 90 out of a possible 100. That means that a price pullback, like the last one, will trigger our buy-on-weakness signal in the Timing, Tmg, column of our daily reports.

This is a signal for portfolio managers to buy. They have no choice because of their large buying in size. They have to wait to buy on weakness. It is a completely predictable buying pattern that every trader and investor knows.

Here is our daily chart showing our short-term vertical, red line Sell Signal and price dropping and targeting a test of support at the line we have drawn at $610. We expect the buyers on weakness to show up again.

Notice on the above chart that all the signals are dropping, taking price down. Traders and small investors will wait for the signals to turn up and the red vertical line to change to a blue one. Portfolio managers will buy the bottom, before the signals improve.

Here is our Earnings Pop Watchlist, and you can see NFLX is on it after reporting good earnings. Notice our Stocks In Demand, SID signal in the SID column. This is our most important Buy signal. You can see the score is 90 out of 100, and that is a strong Buy signal.

In the above report, you can see that NFLX has our most important Buy Signal in the SID column. In addition, you can see our fundamental and technical Buy signals in the Fund and Tech columns. The green bars in the 20-day bar charts are buy signals for us. There is also a green Buy Signal in the Implied return column. We are waiting for the buy on weakness signal to flash in the Tmg column when the price drops to $610.

Finally, we want to do our due diligence by checking with SA analysts and Quant System ratings. The consensus SA analyst rating and the Quant ratings are both Holds. The Quant ratings for Growth, Profitability, Momentum and Revisions are very good, but Valuation gets a bad grade. The most recent SA Analyst has a Sell, but several other analysts have Buys. SA also indicates that the Wall St. analyst consensus is a Buy.

Overall, I think our due diligence confirms our adding NFLX to our Model Portfolio. When NFLX stops outperforming the Index, we will delete it from the Model Portfolio.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the purchase of call options or similar derivatives in NFLX over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Disclaimer: We are not investment advisers and we never recommend stocks or securities. Nothing on this website, in our reports and emails or in our meetings is a recommendation to buy or sell any security. Options are especially risky and most options expire worthless. You need to do your own due diligence and consult with a professional financial advisor before acting on any information provided on this website or at our meetings. Our meetings and website are for educational purposes only. Any content sent to you is sent out as any newspaper or newsletter, is for educational purposes and never should be taken as a recommendation to buy or sell any security. The use of terms buy, sell or hold are not recommendations to buy sell or hold any security. They are used here strictly for educational purposes. Analysts price targets are educated guesses and can be wrong. Computer systems like ours, using analyst targets therefore can be wrong. Chart buy and sell signals can be wrong and are used by our system which can then be wrong. Therefore you must always do your own due diligence before buying or selling any stock discussed here. Past results may never be repeated again and are no indication of how well our SID score Buy signal will do in the future. We assume no liability for erroneous data or opinions you hear at our meetings and see on this website or its emails and reports. You use this website and our meetings at your own risk.

Seeking Alpha’s Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

To understand completely our fundamental and technical approach to making money in the stock market read my book “Successful Stock Signals” published by Wiley. This is the method that I taught to professional portfolio managers on Wall St. and now I share these secrets with you with 50 stock picking programs picking winners every day. You receive our daily email of stocks with Buy Signals before the market opens.