Volume tumbled as stocks took a break after last week’s price run up. The market attempted to breakout and even notched a follow-through type day last week it is not out of the question we’d have a slight pullback. In addition, the market is certainly positioning itself ahead of the Federal Reserve meeting on Wednesday. The disappointment came in the after-hours session with NFLX stock posting earnings were less than stellar for the street. The stock has been down as much as 14 points in the after-hours session. Overall, a decent day in the market despite NFLX stock hiccup.
NFLX stock has been and at this moment continues to be one of the greats in the bull market off the 2009 lows. Citing rising costs to acquire new subscribers, nervous bulls are continuing to sell down the stock. At this point it is far too early to say the stock has ultimately topped. I wouldn’t count it out just yet, it still is the leader in video service. AMZN service can’t touch it and Facebook is late to the party. The stronghold in the space will at some point lead NFLX stock to mediocre status, for now you simply can’t count it out just yet.
Interestingly enough, a stat I have failed to mention in quite some time is the number of stocks over their respective 20 day and 50 day moving averages. While an imperfect indicator like everything else it serves as a nice reference point for the market. Right now 54% of stocks are over their 20 day moving average and 59% of stocks remain above their 50 day moving average. Hardly the frothiness we have seen in the past. Usually anythin above 75% is a warning signal that the market is due for a pull back. Remember, this is imperfect and the % of stocks over the 20 day and 50 day could go above 90%. An important lesson in stock market trading is never to chase a stock. That goes for the market to, chasing will always lead to headache.
Another indicator I tend to glance at, and this surprised me was the number of AAII Bulls. Why would this surprise me? The II number of bulls continues to remain at LOFTY levels yet the number of AAII Bulls dropped to 32.16% from 42.30%. Bears remained near 30%, but the number of bulls fleeing from their camp was a little surprising given the nature of buying the dips. Pay attention to the action of the market rather than opinions of others. At this point, the most reliable indicator is the market itself.
Cut your losses
