Last Thursday, Netflix (NFLX) - Get Report exploded to the upside following its big earnings surprise the night before. The stock opened with a huge upside gap the morning of Jan. 19 but was unable to maintain the early momentum as the day progressed. By the close of trading, the stock was still up over 3.8% but was well off the highs. Netflix put in lower lows the following two sessions and may be headed for a deeper pullback in the near term. For patient investors this will provide a low risk entry opportunity.

In the weeks ahead of earnings Netflix was beginning to pierce heavy resistance just below the $131.50 area. The stock finally cleared this key zone with the help of a high volume, earnings inspired ramp but has been unable to break free. This sluggish action may continue to weigh on shares driving them back down to what is now major support in the process.

Netflix investors should keep a close eye on the $133.70 to $129 area. This key support zone includes the Jan. 19 breakout gap near the upper band and the 2016 highs near the lower band. If the stock can stabilize here a very low risk buying opportunity will develop. Until then, Netflix may prove to be a frustrating long as overhead pressure intensifies.

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Long NFLX