NFLX
has drifted in a frustrating way for months. But now it could be setting up for a gap fill with earnings due this afternoon. NFLX began the year by finding support at its 200-day simple moving average (SMA). This represents a potentially significant change in character from July, when the same line was resistance. Traders may now be able to use the old rejection point of $336 as support. Below that is the 50-day SMA around $315.
A good earnings report could drive the stock up into the gap, possibly toward its July 17 low of $361.75.
This would be a binary event, with risk of a drop if its numbers fail to impress. So traders should proceed with caution and use appropriate position sizes. They can also use options to manage risk -- not a bad idea because NFLX is a very active and liquid underlier.
In conclusion, this streaming-video innovator is one of the most popular growth stocks of the last decade. It's also up more than 30,000 percent from its IPO. NFLX might not be doing much lately, but it's definitely not a name we want to forget.