Can Netflix’s Stock Remain Hot After the Big Run?

With shares of Netflix (NASDAQ:NFLX) trading around $182, is NFLX an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for a Stock’s Movement

Netflix (NASDAQ:NFLX) is a titan in the video streaming industry. They are present in many of the popular platforms including computers, tablets, phones, gaming systems, and televisions and quickly adopt new platforms if need be. With the internet and specifically video over the internet, Netflix has the proper infrastructure to take advantage of this hot trend and not to mention, at a reasonable price. Look for Netflix stock to continue to make headlines on this front as more and more people adopt this form of entertainment.

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T = Technicals on the Stock Chart are Strong

Netflix’s long term multi-year chart sees a few ups and down. From a low in 2002 of $2.42 Netflix stock made highs of $304.79 in 2011, that’s a 12495% return or 125 times on an initial investment! That opportunity already passed so now let’s take a look at what price is telling us. The stock gapped significantly higher, above last year’s highs, on positive earnings news this last quarter and looks to be headed towards $200 per share. If that level clears, $250 per share is in sight. Netflix has been trending higher on higher highs and higher lows, as an uptrend should be, but it may need a breather here.

How can one more clearly identify a trend? Moving averages. Essentially, a stock should be trading above its key moving averages. The key simple moving averages are the 50-day, 100-day, and 200-day simple moving averages. A stock trading above their 20-day simple moving average would simply be a very much appreciated added bonus! How do Netflix’s simple moving averages look? Today, Netflix stock is trading above its 20-day, 50-day, 100-day, and 200-day simple moving averages. What else can the simple moving averages tell us? Well, the slope of the moving average adds to the strength of the trend. Netflix’s moving averages are all sloping upwards which strengthens the uptrend. What did we learn? The moving averages are pointing towards a strong uptrend in Netflix!

Now, investor sentiment is also key to the success of a stock. What good does it do to find a stock you think is great when nobody else feels the same way? One way to gain perspective into investor sentiment is through the use of the options market. More specifically…