A pair of alliterative NASDAQ-100 issues
merit scrutiny this evening: the cryptically titled NII Holdings and the trader
favorite Netflix.
The indices concluded the session in the
unusual way of having their respective daily percentage changes be multiples of
each other. The DJIA ended down 0.25%, the S&P slid 0.50%, and – you guessed
it – the NASDAQ surrendered 0.75%. Ten year Treasuries declined to fresh record
lows.
NIHD, then. The stock is a holding
company for Latin American businesses operating under the Nextel (mobile telecommunications)
brand. Notably, its chart is forming a stunning capitulation pattern on the daily candles view, as is apparent below.
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| NIHD, 4 y 1d |
Does today’s low represent a buying
opportunity? Powerful evidence on the affirmative side is that price action
sliced below long-term (11-month) price channel support that was steeply
downward sloping -- usually an indicator of capitulation and concomitant contrarian opportunity. Volume was also heavy, although about a half dozen sessions over the past 52 weeks had still greater turnover (and at a significantly higher
value per share).
I, for one, am inclined to expect
further lows, chiefly because bears squashed a nascent afternoon rally and
brought the stock to new intraday lows in the final minutes of trade. Still,
today’s accelerated selling suggests a short squeeze will come sooner rather
than later.
Onward to Netflix. These pages made a
bullish case for the shares ten days ago – and at a price a full 20 percent
below today’s levels.
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| NFLX, 180 d 1h |
Despite its recent steep ascent, NFLX looks
poised to pop again. Looking at the above hourly candles chart, price action over
the past week has generated a bull flag and today edged to a fresh two-month
high. Somewhat significantly, the stock also just stepped across the resistance
of a six month price channel – although the channel’s slicing through clear air
for the last two months renders it less reliable.
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