NFLX (Netflix) is a bug looking for a windshield.

In this post I shared my model which strongly suggested that NFLX shared had peaked.  First confirmation of that topping was the wild breakout that created an E wave with a throw over to sucker in as many excited sheeple as possible before breaking back down violently into the channel in a second confirmation.  Now the shares have been moving mainly sideways trying to determine if they should try to break out again or just go for the breakdown through the lower support line (i.e. the 3rd confirmation should it occur).

How do I think it will turn out?  Well let's put it this way:  NFLX currently has my vote for easiest short pick of the next 6 months.  If it can break back out the top resistance and hold it for 5 trading days then I would recant that but the odds are very, very low that that will occur at this point: perhaps 10% IMO.  In other words, the chart tells me this is a turkey that is going to fold (had to get my little Thanksgiving humor in there).  I think the 2nd wave looks like an ending diagonal already.  This is not confirmed yet and thus still pretty speculative.  But there is a growing body of evidence supporting an imminent breakdown in the shares as a 3rd wave breaks down below the lower support (as only 3rd waves can generally do).  If this happens then it will likely be within 1-2 weeks.

So, if I think it is going to fold then what's the downside?  Unfortunately, the EW weather report is not looking good for NFLX gamblers.  As in party cloudy with a likelihood of major collapse.  Nobody is saying this right now AT ALL.  Most everyone thinks NFLX is still a good "investment".  In fact in the news headlines under Yahoo, we find Netflix's recent Ponzi gains being shouted from the rooftops by the Associated Press: Here sheeple, come and get it.

I would avoid any long position in this equity no matter how hard these "news" sources (cough cough paid sh--- [rhymes with "pill"]) try to pump this stock because, after 5 big waves up, the a-b-c retracement quite often takes the shares back to the prior 4th.  As in a stock selling for $347 today will likely pull back to $50.   I know, I know, crazy talk.  And maybe it won't happen.   I can't predict the future with perfect accuracy and neither can anyone else.  But I like my odds better and better each day that goes by without this stock breaking out.

By the way, I do want to point out one more thing: the rising red line connects the peaks of waves 1, 3 and 5.  In fact the peak at 5 was a slight throw over of this trend line.  That strongly suggests that the recent spike was in fact the 5th wave.  As usual, time will tell.