Trader Mike

I didn’t find a whole lot worth posting as most stocks are just trapped in a trading range. I’m still of the opinion that the indices are rolling over — if ever so slowly. I’m also still expecting an increase in volatility. Note the Bollinger Band Squeezes on the Nasdaq and S&P 500 which also indicate that we should get an expansion in volatility.

(Update: I forgot to mention the volume. I wouldn’t make too much of the volume increases on Friday. That was due to all the index rebalancing on Friday as well as expiration.)

In addition to the S&P 500 and Nasdaq, here are charts of the Eastern Europe ETF (RNE), Nasdaq …

So Jim wants to know if Netflix “look like a good short or put candidate here.” This is a tough call for me. It would be much easier for me to call it a short if the 50-day moving average and the lower Bollinger Band weren’t so close by. In fact, the stock bounced off of both of those levels yesterday. On the other hand it’s broken what’s been its trendline for most of the year. It broke that uptrend while making what’s supposedly a reliable continuation pattern, the falling three methods. (Actually, it wasn’t exactly a falling three methods but it’s close enough for government work.)

Personally, I …

Some great news for NetFlix this morning (via Briefing.com):

07:30 NFLX Netflix: On website, Wal-Mart says to discontinue its current DVD Rentals service… points customers to NFLX!

-Update- See 7:29 comment.

07:29 NFLX Netflix: Wal-Mart teams up with Netflix (15.50 )

Wal-Mart posted the following page on their website: “Great opportunity for current members of Wal-Mart DVD Rentals! Through June 16, 2005, you can sign up with Netflix and get all the Netflix benefits for the same rate you now pay at Wal-Mart!… If You Do Not Sign Up With Netflix After June 16, 2005, Wal-Mart will discontinue its current DVD Rentals service. If you are a Wal-Mart DVD Rentals member and do not sign up with Netflix, you can continue to …

Brad, who’s long NFLX from $10 and change, wanted me to take a look at the chart. I had another request for NFLX last month when it was at $10. The person who requested that chart mentioned that the stock may be ripe for a short squeeze. The stock dropped about 8% after I did that chart but is now up about 22%. Based on how steep this current rally is I’d guess that the shorts are indeed scrambling now.

Anyway, back to Brad… I don’t know his time frame for this trade but it looks good for a short to intermediate term trade. I see a bit of resistance above but frankly I’d be …

I got the following message about NetFlix:

NFLX - Considering the high short interest and the relatively stable price over the past couple days, would this be a good stock to invest in for someone hoping to make a large amount of money in a very short amount of time?

First, if I could answer a question like that I wouldn’t be here — I’d be off traveling the globe on one of my fleet of private jets. But seriously, I don’t see anything in the chart that would make me call NFLX a buy. The one thing it does have going for it is that it’s oversold. That combined with the short interest could make it a …

I’ve been fascinated with the battle between NetFlix and BlockBuster (and Wal-Mart) for a long time. I’ve long thought that the also-rans had nothing on NetFlix. Recently though, it appeared that NetFlix was slipping as they even got close to losing me as a customer. I’ve been a customer of theirs since 1998 and my attitude has always been “you’ll take my NetFlix subscription from my cold, dead hands.” I recently took a free trial of BlockBuster’s online service and was underwhelmed by it. This note from Briefing.com sums up my experience pretty well:

08:16 NFLX Netflix: Short-term blip, or real turnaround? (10.46 )

Some skeptical, some positive following Netflix announcement of significantly …

This just out from briefing.com after NFLX reported earnings:

“17:46 ET NFLX trades down to $11.00 upon resumption of trading”

‘Nuff said!

Update (by Michael):

I thought I’d add a chart of NetFlix’s after-hours trading:

The action in this stock over the last 2 weeks or so is a trip. Duru covered the irony of their earnings report the other day. If you read the comments on that post, you saw that I’ve been a very loyal NetFlix customer since 1998. I’d always scoffed at the new entrants into the online DVD rental space because they just didn’t seem like they were much of a threat to NetFlix to me. But …

NFLX has now essentially closed that gap from the earlier “good” earnings news. In honor of Mike, I thought I would drop a mandatory “NFLX presents yet another example of how dangerous it can be to chase stocks that gap up in the morning.” But I must also extend an olive branch to the NFLX bulls by saying that if this gap holds as support, the stock could start looking good for you bottom-fishers and aggressive flippers out there. Since the early September lows, NFLX seems to be putting in higher lows and higher highs… (again, this gap closure needs to hold).

Don’t we all wish we had such a stellar business model? In what could go down as the joke of this earnings season, Netflix gets a pop today after announcing that it will make MORE money because customers are buying LESS. Next, traders and investors will get excited when Netflix announces they are saving money by offering fewer movie titles…and only the worst movies to boot. That will reduce operating costs AND get customers buying less. Only one more step to just driving those pesky, margin-draining customers away for good! Wouldn’t we all like to make money by selling nothing to noone (or is that everyone?)?

“Netflix Announces 73 Percent Year-Over-Year Subscriber Growth for the Third Quarter; Raises Guidance …

Wal-Mart is stepping up their assault on NefFlix. They’ve lowered their prices, and are expanding their service. I think they have a much better chance of being successful in this space than Blockbuster because they don’t have the same cannibalization issues. I’m partial to NetFlix because I’ve been a customer for so long, and I’d like to see the little guy win. But I think their stock is in for some short-term pain due to this Wal-Mart threat.

Edit to add: More discussion of this battle here.