It doesn't feel like Netflix (NFLX) - Get Report is up 40% on the year, does it? That's because the stock's dreadful performance over the last six months has crushed any positive sentiment left in the name.

After hitting a double-top near $420 in June and July, it's been an ugly run for Netflix. That's somewhat ironic because the stock was up more than 100% going into the summer. So while Netflix outperformed the Nasdaq by a massive amount first half of 2018, it massively underperformed in the second half.

Now investors are wondering what they should do -- is this a great buying opportunity, or is this the end of Netflix's run?

First, we need to look at what's hurting Netflix here. It doesn't help that the company will bring in less than $16 billion in revenue this year, but plans to spend around $8 billion on content costs. Just like that, 50% of Netflix's revenue is eaten up and that's before it accounts for all of its other costs. Granted, CEO Reed Hastings has built a $100 billion streaming media empire, so I'm not one to critique his methods. After all, Netflix's major potential rests five and ten years down the road, when its 130 million subscribers balloons into a far larger number on which Netflix can then raise prices.

However, those content costs are expensive in the meantime and rising interest rates don't do any favors for Netflix. It does not have the balance sheet that other FANG names have, like Facebook (FB) - Get Report and Alphabet (GOOGL) - Get Report (GOOG) - Get Report , and that creates a problem. The prospect of increasing competition likely makes investors a little nervous, too. Whether that's from Disney (DIS) - Get Report , AT&T (T) - Get Report , Hulu or other platforms.

That's not to take away from Netflix -- believe me, I love it -- but in this climate where the stock market is under heavy pressure, there are reasons to be concerned about Netflix.

Alphabet, Disney and Facebook are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells GOOGL, DIS or FB? Learn more now.

How to Trade Netflix Stock

Image placeholder title

With all that said, let's not forget that Netflix has been a massive winner this year. Even if it stumbles into year end, gains anywhere near 40% in one year are incredible. Plus, it could setup for more upside going into 2019. After all, last quarter was pretty good. It will need another impressive earnings report in January to bring bulls back to the party.

Can it happen? Let's look.

Below all three major moving averages, it's no secret that Netflix has lost a lot of momentum. The orange arrow shows what happened when the company reported in October. It set the mark for a new downtrend line to form (blue line), which has kept pressure on Netflix for a few months now.

I would remain cautious on Netflix until the stock can push through that downtrend line. A break above can launch NFLX stock up to its 50-day moving average. Should it continue to act as resistance, look to see where support comes into play.

With its reversal on Monday, Netflix has put in a lower high from its November lows (highlighted by a purple line on the chart). That's an encouraging development, even if it's only one small step. Should this level fail, look to see how NFLX handles the recent lows near $250. A break below could send shares to $230.

This article is commentary by an independent contributor. At the time of publication, the author had no positions in the stocks mentioned.