Netflix Expands to South America

By Raghu Gullapalli


This morning news came out, courtesy of All Things Digital, that Netflix (NFLX) was expanding its operations into Latin America.

Once the news broke, the stock gapped up in the pre-market and looked ready to launch its booster rockets once again in attempt to break the $300 barrier.


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This is a prototypical example of a long gap trade.

• Netflix gapped above a long-term resistance level, in this case the all time highs of $277.70.
• The premarket volume in the stock exceeded 500,000 shares, ensuring liquidity.
• The stock gapped up more than 3%
• Netflix gapped on a strong catalyst that did not involve earnings, i.e., the news of its impending expansion into the Mexican, Caribbean and South American markets.

This expansion into these markets gives credence to Netflix’s foreign expansion plans and lends credibility to the company’s overall strategy. If you will recall, just last fall the company expanded into the Canadian market and in just a few quarters of operations it has emerged as the market leader.

With the equity markets reacting well to the news of the Greek bailout and the strong surge over the past week, I have little doubt that the tailwinds from the market could be enough to push the stock into the hallowed $300 territory -- an area occupied by precious few technology companies.

If all that wasn’t enough, how about a cherry on top? The cherry takes the form of an “F” for Facebook, the social media behemoth, which has been considering a joint venture with Netflix. Facebook recently added Reed Hastings, the CEO of Netflix to its board of directors.

But a word to the wise: In this dynamic market landscape, today’s darling could well become tomorrow’s dud, as is well represented by the misfortunes of Research in Motion (RIMM). Market sentiment could change very quickly and could become headwinds blowing in the face of upward momentum.

Smartstops has the short-term and long-term stop for Netflix at $239.64.


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The Bubble Has Popped -- Now What?

A rare halt in oil trading Wednesday triggered a sharp selloff in commodities and equities in markets afraid of an encore of last week’s commodity plunge. The last halt in oil trading occurred in September 2008, a week after the collapse of Lehman Brothers.

Sliver lost 9% in the selloff, erasing gains in the previous couple days and was down another 6% as of this writing. It has yet to find a bottom -- or as Bob Barker of "The Price is Right" might say, “Down, down it goes -- where it stops no one knows.”

Now with the increased margin requirements driving a number of speculators out of the market, the precious metal may seek out price levels more in keeping with historical norms. Those prices are calculated by seeing how many ounces of silver are needed to buy an ounce of gold. Over the past 10 years the ratio has been roughly 60:1. If silver were to return to a similar ratio, it could go down as far as $25 an ounce. iShares Silver Trust(SLV), the proxy we use in lieu of silver at Smartstops.net, has the short-term stop at $31.97 and the long-term stop at $29.37.

If that wasn’t enough to make you reconsider being long commodities, the Powershares DB Commodity Index Tracking ETF (DBC) has formed a head-and-shoulders. A pattern associated with a change in trend direction. The neckline/support of the pattern coincides with the Smartstops.net short-term stop at $28.16 and the long-term stop at $27.30.

SmartStops provides effective, easy-to-implement risk monitoring for investment professionals and individual investors to optimize profits and minimize losses.