Selloff Pushes NFLX to Oversold
Netflix (NASDAQ: NFLX) sold off after Morgan Stanley downgraded the stock. Investors have been nervous about the valuation of NFLX for months and despite those concerns, the stock gained more than 310% in 2013. The occasional pullbacks in the stock that occurred last year proved to be buying opportunities.
After this week’s selloff, NFLX is more than 12% below its all-time high and oversold with a PowerRatings of 9.
In the past, PowerRatings of 8 or higher highlighted profitable entry signals into NFLX.
PowerRatings are based on the relative strength or weakness of particular stocks or ETFs. The higher the rating, the greater the one week historical gain has been for stocks and ETFs with that rating. For best results, enter trades on stocks with a PowerRatings of 8 or higher with a limit order 3-7% below the previous day’s closing price. Higher % limit entries have historically shown a greater percentage of winning trades but higher % limit orders also reduce the chance of trade execution.
In the past, buying stocks with *a rating of 9 on a 3% pullback the next day and selling five days later has been profitable 75% of the time. The average winner has gained 4.3%. Other entries and exits also show high winning percentages and large average gains.
NFLX should be considered a buy under $330.76.
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All data is as of the end of day on 1/8/2014.