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Among Top FANG Stocks, Here's Why Netflix Has Reached A New Buy Point

For a stock market bear, the FANG stocks still show fangs.

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Netflix (NFLX) broke out Wednesday, surpassing the top of a flat base that barely met the minimum time requirement. On Thursday, shares continued to rise nicely.

At one point, the FANG member got as high as 351.19, 3.6% above the proper entry point of 338.92. The proper buy zone extends up to 355.87.

In a proper flat base, the stock must correct in price for at least five weeks. On Netflix's weekly chart, you can see that the video streaming giant began its correction in the week ended April 27. Last week was the fourth week of base building.

So, is Netflix moving out prematurely?

Not necessarily. Here's where the daily chart really counts.

Since the stock began its mild decline April 18, Netflix formed the flat base for 25 trading sessions through Tuesday of this week. That's more or less equivalent to five weeks' worth of time in building this important chart pattern among leading stocks.

Then on Wednesday, Netflix rallied 13.10 points, nearly 4%, to 344.72. It closed virtually at the session high, a sign of strength.

Now, take a look at the stock's action from March 12 to April 16. The cup base showed symmetry in shape. The 19% drop from head to toe? Nice and mild. The problem? Five weeks are not enough to construct a proper base. You need a minimum six weeks for a cup without handle.

Hence, Netflix's cup carried a V-shape flaw.

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