Netflix, Inc. ($NFLX) has been a highly bullish stock the last two years and has simply exploded in 2010, reaching highs of over $200 a share. However, the recent pull-back in price suggests we could see a new all-time high printed soon. I’ve got three reasons why Neflix could be headed for $220.
1. EMA Support
The three pivot-based EMA’s show the short, medium, and long term health of a stock. Clearly, price has been extremely bullish during recent months, with the 34-period EMA holding as support the entire time.
Every pull-back to the 34-period EMA has been a great opportunity to “buy the dip”, which has worked like clockwork recently.
The fact that price has already begun to show initial signs of strength off the 34-period average indicates a likely push to new highs ahead. Also, today’s close above the 13-period average is a cue to buy into strength tomorrow.
2. Pivot Range Support
The monthly pivot range has held as support so far this month. Each test at the bottom of the range has led to responsive buying which, in turn, could lead to initiative buyers entering the market if price can push beyond $192.
During well-defined trends, the pivot range tends to hold as support, thereby offering fantastic opportunities to buy at a bargain price. This has been the case during the recent four-month rally.
Moreover, $180 continues to hold as gap-support, which remains a key level in the chart. If price continues to hold above $180, we could see a solid push to new highs above $200 – likely toward $218 to $220 (monthly H3 and R1 pivot levels, respectively).
3. New Long Signal
The Modified PEMA Crossover system has fired a new Long signal today (not shown). As you may have read in my FREE 50-page eBook, Profiting with Pivot-Based Moving Averages, this setup is amazingly accurate in trending markets and usually forecasts a new high.
Again, if $180 holds true, look for price to push toward $220 heading into the end of the year.
Let’s see how this plays out!
Cheers!
Frank Ochoa
PivotBoss.com
Follow Frank on Twitter: http://twitter.com/PivotBoss
oh it will! ben bernanke likes netflix 🙂
LOL! That was gonna be my 4th Reason!