Earnings season is our favorite time to trade. It’s when traders can experience some wild moves for some of our biggest winners of the year. On April 17th, NFLX announced its quarterly earnings. Now a good earnings report would cause the stock to gap up strong. But NFLX opened flat, which means this stock wasn’t getting well received. As soon as NFLX shows weakness and cracks on support, that’s the spot to nail this stock short.
$NFLX During Earnings
On the 1 minute chart, NFLX broke underneath the $146.30 level. Once it did, we entered for a short at $146.10 with a stop at the high of the day. Immediately the stock tanked and we covered into the flush at $145.20 and $144.96. A few minutes later NFLX put in a bear flag setup and we reshorted the stock at $145.80 and covered at $145.31 and $145.4.
After the drop, it bounced back to support and we took it short at $146.10. We covered most of our position into the flush at $145.54, $145.47, and $145.11. These areas were near the VWAP but we kept a few 100 shares for the spike down.
But just because NFLX had a great move on earnings, doesn’t mean you should take it off of your watchlist. We nailed it again on Day 2. When NFLX spiked first thing in the morning, it faded off right into resistance. As soon as it flushed underneath the moving averages we took it short and covered into weakness. Every time NFLX popped into the VWAP, I reloaded my shorts with a stop above rode it down. Each time it broke below support I also added my position and covered into each flush while keeping some of my core position.
Remember, with earnings plays like this its important not be afraid of high priced stocks like NFLX.
In the last 2 days, it puts in just a tremendous range. But by trading with the appropriate size, it’s easier to manage your risk and you can also have $1000 days. Earnings plays are great because these stocks will always have order flow independent of the market. It will have its own range and volume and by marrying your technical factors with the fundamentals you can always nail these trades.
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