Netflix Sending Mixed Signals - Which Way Are You Betting?

The attached chart of Netflix is showing all love and joy. An amazing 50% rally, which of course shows a huge spike in the oscillating indicators.

Breakouts in RSI and CMF confirm the rally, but they would wouldn't they.

Yet OBV is not confirming the rally.

The rally, has been so good, that it has lead to 4 gap breakouts.

In technical analysis they are called:
1. Break away gap (the first in a new strong rally)
2. Continuation Gap (powerfully reinforcing the break away gap)
3. Another Continuation Gap
4. The final gap in the series is called an exhaustion gap (when the rally is finally burned all the fuel)

Next on the chart I have highlighted what is called an island reversal. This is the top of the trend and usually (but not always) followed by a gap down.

So my thoughts on the mixed signals that you can interpret however you like in your own way are.

1. The current rally has already priced in great news.
2. If the earnings are great, then what upside is left - not so much
3. If the earnings disappoint, even a little, that 50% rally could be gone within the week.

There comes a time when you go with your gut based on trying to comprehend the market psychology and not charts. I have gone with a bunch of 1 week put options, with money I can afford to lose, for a gain I cannot live with missing.

As Mr Buffet said, "be fearful when others are greedy", and everyone is being greedy right now.

May the force be with you my dear trading friends whichever way you bet.