All posts by jimmybob

NetFlix – Like going to the Buffet with Lobster on the Menu

We have written about NetFlix (NFLX) quite a few times over the past year, and have shared our somewhat bullish outlook. This stock has had an epic fall from grace that all other growth stories will be compared to going forward. The question to ask is if the growth story is over or are we in Chapter 3 of a novel? Time will tell as this NetFlix story is filled with quite the drama and suspense.

On Tuesday CEO Reed Hastings posted this on his facebook page:

A quick boast about record viewing hours. Not really a 'material' event, so dont think there is a need for an 8-k as the genius's over at CNBC think it warrants. But it was enough to re-ignite the fire under a dying stock. The stock ripped $10 to close at $81.72. It was an amazingly strong rally with no substantial pull-back and huge volume. The one that you like to see if your banking on a multi-day run like we are. We thought NetFlix (NFLX) was on the verge of a rally in mid-june, and looks like we are finally getting it. Why?

Well with the huge subscriber base and international growth still on the horizon, we think NetFlix (NFLX) still has huge growth potential.

Lets do some quick math on the 1 billion viewing hours for June. Last reported numbers were for the 3 months ending with December of last year, when there were a total of 2 billion viewing hours. Thats a 33% increase in viewing hours in June from December. So are folks viewing habits changing so much, that they are watching 33% more programming on NetFlix(NFLX)?

So is NetFlix (NFLX) like a buffet and folks are just stuffing their faces with more macaroni and cheese? Thats what this "5 star rated" ANALyst thinks:

Wedbush analyst Michael Patcher said the increase in viewing time might just lead to an increase in content costs for the Los Gatos, California-based company.

"Netflix is an all you can eat buffet, and if the buffet sees its consumption go up by 50 percent and they don't raise price that is not a good thing," Patcher who has an "underperform" rating on the stock, said.

Yeah, this guy has been bearish on NetFlix (NFLX) and Bullish on Coinstar (CSTR) for sometime. A classic heads I win tails you lose scenario. He's all ready to throw a quick analogy to rationalize his gloom and doom prediction on NetFlix (NFLX). Sorry to hear that Michael, but you have it wrong this time just like your $44 price target on FaceBook (FB). Its not about consumption, but the quality of the consumption. You see cheap a cheap product, we see Lobster.

Your telling me subscribers are watching 33% more content then 6 months ago? I am sure there has been an increase in subscribers viewing hours...a result of smart phone and Ipads, but it's not 33%. June was warmer then average... you think folks sat on their ass to watch T.V. shows? Based on the subscriber numbers, each NetFlix (NFLX) streaming customer would need to watch 10 more hours of NetFlix (NFLX) content in June then in December to get the 33% increase needed for the 1 billion viewing hours.

To me it sounds like there were a heck of a lot of people signing up for service. But what do I know, I am not an ANALyst.

By the way, we have the 85, 90 weekly calls as well as the July 24 105 and 110 calls.

Volume tells the story on NetFlix(NFLX) and we think there will be at least 1-2 more green candles on the chart before any pullback, meaning $90+ sometime on or before Monday.

Happy Trading!!!

 

 

July 5th Watchlist

Hope everyone had a great holiday – now back onto business. Yesterday was the 4th of July today is National Intervention day. UK announced another round of QE as expected. Last vote was 5-4 against, but now UK needed to take action.

 

China reduced it’s lending and deposit rates again, the 2nd time in a month.

And finally the ECB lowered its rates to a record low of .75%.

LIke i keep saying, $SPY should be over $145 by now based on the US numbers, so this added intervention will help fuel the summer rally.

Buy the dips here IMHO -

More of the same for today on the watchlist as growth stocks will lead this charge IMHO ~

PCLN, LNKD, ISRG all look good.

AAPL breakin $600 PM here, maybe looking for $620 very quickly so $610 calls could be a nice flip.

SHLD – still on this one this week. Have $65s, 62.50s maybe a nice lotto @ .31 as this POS will start to get some legs here.

Earnings season next week, so will have some plays to grab before the weekend for the hype ~

Lets have another great trading day and remember, dont fight the tape!

- jimmy

July 3rd Watchlist

It is starting to feel like the melt higher is beginning. Some of the growth stocks and sector leaders saw some nice moves on an otherwise flat day, meaning big money is starting to chase the performance that is coming. Could be wrong, but getting ahead of the move may be a nice way to play things.

 

Earnings season starts monday, so maybe a somewhat quiet week. Today we have factory orders at 10am and a market close at 1pm. A possible uneventful day.

Will position myself with some more calls for Thursday Green Gap day. PCLN provided a nice move yesterday, LNKD surged and held its ground, and BWLD was flat.

Will be looking for more positions in those today. I will have a write up on BWLD this week, as I feel this is the next stock to really get some legs. With CMG losing its luster, BWLD should be the one to reap the rewards into earnings late July. $100 calls should be a nice play.

Also watching AAPL for the possible break of $600, where i think $610 would come very quick.

Stocks to watch today:

ISRG PCLN LNKD BWLD SHLD BBY AAPL

I wont be around too much today, so if i dont see you have a great 4th of July(if your from the US)

- Jimmybob

Shake n Bake

 

I have written countless times about the intervention in this market. How a retail trader can become brainwashed by the headline news, only to be blindsided by the 2-3%+ market squeeze ignited from some more can kicking by the powers that be.

One only need to look back to November 2011, to see the last time a floor was put into equities via the World Central Banks. This time it was Europe backstopping banks and it's countries serious debt issues. You see anyone talking about Spanish 10-year bond yields anymore and Spain's unsustainable debt level? Any more rumors of financial ruin for the eurozone?

The summer should provide for some quiet trading and a melt to the upside. There was some doubts to that thought 2 weeks back, when the market volume was telling of a possible break to the downside, but we remained bullish above the $SPY 127.90 level. 

Hope folks enjoyed the 'SHAKE", now it's time to "BAKE"

Happy Trading!

Sears Holdings Corporation (SHLD)

Making money on options can be a tricky business, as a mere 1% move may result in a losing trade. Finding ones that may move 5-10% in a few day trading window is the recipe for success. Obviously finding them is the hard part. Sears Holdings Corporation (SHLD) came up up on a scan this morning and has a history for some large moves.

Looking at the chart, a break of $57.83 should ignite a sharper rally. We are currently holding the $60 weekly and July calls.