Netflix is my least favorite stock: overrated, overpriced, and over-owned by money managers who seem to think every person on Earth will eventually subscribe. That may be true for Facebook, but Netflix is a different animal. In the beginning, the company succeeded with an ingenious business model that required intensive use of the Postal Service to ship DVD movies back and forth. Their secret sauce was a vaunted algorithm that told customers which movies they would most enjoy. Netflix deserves credit not only for surviving the transition to streaming entertainment, but for remaining a dominant purveyor of it. But the algorithm? It stinks. Like a trading-system algorithm, its performance has inexorably deteriorated over time. The result is that the choices it serves up are akin to cream of wheat vs. oatmeal vs. grits.
Embarrassingly Bad Movies
Even if the algorithm were doing its job, Netflix’s catalogue of movie and TV entertainment is so uninspired that it barely improves on basic cable’s 99-channel swill. Their inventory of movies in particular is an embarrassment — hundreds and hundreds of them with no-name actors and straight-to-TV production values. Nor has Netflix produced a series remotely in the same league as Fox’s 24 or some of HBO’s best, including Deadwood, Boardwalk Empire and The Sopranos. House of Cards may have won awards, but only judged by the standards of a mostly-millennials audience that regards Lena Dunham as a genius.
None of this seems to matter to the one-decision, institutional bozos who earn princely sums throwing OPM at the stock. It has risen vertically for the last two days even though the Dow and the S&Ps have gone nowhere. Now is the time to short NFLX, however, since it is closing fast on an important Hidden Pivot target that looks likely to show precise stopping power. I have posted a strategy for doing so in the chat room. If you’d like to be in on this but don’t subscribe, just click here for a free two-week trial subscription. It will give you instant access not only to the chat room, but to actionable ‘touts’, intraday alerts, ‘jackpot’ bets using super-leveraged options and impromptu ‘requests’ sessions online. _______ UPDATE (June 21, 5:26 p.m. EDT): The stock was all over the place today, but it fell shy of our target on the opening-bar gap (which has become almost obligatory lately). We’ll stick to our game plan, bidding for puts as detailed in the chat room. I’ll refresh my guidance via a post there this evening._______ UPDATE (June 24, 11:06 pm.): Like its psychotic cousin AMZN, Netflix shares have turned south just an inch shy of a clear and important rally target, a Hidden Pivot at 426.82. It remains viable in theory, but we’ll need to monitor the stock closely for signs of serious trouble. It would begin with minor abc downtrends that exceed not just their midpoint pivots, but their ‘d’ targets. _______ UPDATE (June 25, 9:48 p.m.): The carny men and thugs who control this stock struggled to hold above lows recorded early in the session, but for once they failed. Use the pattern shown in this chart as a road map for the next couple of days. It implies minimum downside on Tuesday to at least 373.96, the midpoint pivot. The pattern and its ‘d’ target will not be confirmed, however, until such time as NFLX takes a precise bounce from p=373.96.