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After a jaw-dropping move from $17 to $304 per share in less than three years, it is no wonder that Netflix bulls are slow to accept the sudden but potent change in character that the stock is exhibiting. The temptation is to pick the big bottom here, but even after dropping two-hundred points over the past ten weeks, there seem to be more traders looking to go long than short. That type of psychology tells me that the changes in the stock’s attitude and latitude have yet to come close to being fully accepted, which I would say is a perquisite for forming a major bottom. While Netflix can, and most likely will, see a knee-jerk rally in the near future, the risk/reward profile is, and has proven to be, unfavorable given the menacing threat of swift further downside.
As Jimmy Buffett sang in his famous song, “If we couldn’t laugh/We would all go insane.” Instead of going crazy trying to pick the bottom in Netflix, you are probably better laughing it off and waiting for a better spot, when the changes in attitudes and latitudes are better respected.
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I recently discovered BlockBuster’s liquidating.
2010 was the year “of the rental.”
2011 has the unraveling of the movie rental, IF NOT (?) the movie (notice, not even saying “Hollywood”).
I can’t see the dots, but there’s a narrative going on he’e.