As the major indexes linger around their all-time-highs, plenty of stocks continue to fly off the handle. Energy companies (like PTEN, which we talked about yesterday) in particular are enjoying a nice boost, trading well outside of their normal daily range.
Others, like ROKU, are getting crunched, despite being in the midst of healthy uptrends.
But there are also some companies that simply don’t know which way to go – frustrating traders and analysts alike.
Take Netflix (NASDAQ: NFLX), for example, which has bounced from wall-to-wall for over a month now. Every time NFLX shares look ready for a breakout, they end up stalling by the end of the week.
And while many investors have simply given up on Netflix, some traders see the recent “choppiness” as an opportunity.
Here’s why:
In the weekly candlestick chart above, you can see that in addition to our normal stochastic graph, we’ve added the Choppiness Index, which as the name suggests, measures choppiness in an asset.
As it stands, NFLX shares are “chopping” well above average, suggesting to us that it could be getting ready for a breakout sometime in the near future.
It’s very common to see high Choppiness Index readings right before a rapid price movement (to either side), making the current trade setup that much more attractive. To anyone holding NFLX shares, though, this would be cause for concern, as we’re unsure which direction the stock will go.
But since we’re looking for new trades here, NFLX appears to be a great option. In addition to the tight Bollinger Band range, we can plainly see clear levels of support and resistance. Going long 0.50% above resistance or short 0.50% below support is a no-brainer should those price points be encountered..
As a bonus, a breakout will likely occur around the same time of the upcoming G-20 summit, which will be held in Japan from June 27th-28th. Presidents Trump and Xi plan on meeting in Osaka to discuss the ongoing trade war, and any conclusions drawn from their conversation could have a profound effect on equities.
So, whichever way the market goes, NFLX shares look poised to follow once a trend finally develops. And when it does, one of the two trade triggers above will fire – putting us into a favorable position at a price that confirms NFLX’s future movement.
