Publish date:

Here's How Far Netflix Stock Can Rally Now

Netflix stock has been exploding higher and is now notching new all-time highs. Here's how to trade the stock from here.

The FAANG stocks are often a focus among investors, but the trillion-dollar companies are largely the focal point.

Put another way, Facebook  (FB) - Get Facebook, Inc. Class A Report, Amazon  (AMZN) - Get Amazon.com, Inc. Report, Apple  (AAPL) - Get Apple Inc. (AAPL) Report and Alphabet  (GOOGL) - Get Alphabet Inc. Class A Report  (GOOG) - Get Alphabet Inc. Class C Report are largely the focus — not Netflix  (NFLX) - Get Netflix, Inc. (NFLX) Report.

Even though the stock is hitting fresh all-time highs on Tuesday, up about 3.4% to $610.72 at last check, Netflix commands a market cap of just $270 billion.

Perhaps the “N” in FAANG should be replaced by Nvidia  (NVDA) - Get NVIDIA Corporation Report — or maybe it should become FAANNG, like when most investors added Apple to the mix.

However, perhaps it's best if we don't write off Netflix quite yet. 

After consolidating for more than a year, we’ve seen an impressive run. Should the stock close higher on the day, it will be Netflix’s 16th gain in the last 17 sessions, with two separate runs of eight straight gains.

The one down day in that stretch was a loss of just 1.05%.

Trading Netflix Stock

Daily chart of Netflix stock.

Daily chart of Netflix stock.

TheStreet Recommends

Earlier in the summer, Netflix was grinding along the $482 support level. That area is near range support, as the stock was range-bound for more than a year. That consolidation has now resolved higher.

After chopping around the 200-day moving average, Netflix firmed up just above $500 and began to power higher. Little did investors know that this name was about to rip off almost three weeks of consecutive daily gains.

It makes me wonder if Roku  (ROKU) - Get Roku, Inc. Class A Report and other streaming names may soon fetch a bid.

Netflix shook off a poor response to earnings nicely, but now clearing $600, this name will obviously need to rest at some point. The question of where it finds support is more important to me than when. 

I would love to see the $590 to $600 area act as support, along with the 10-day moving average. The latter hasn’t been tested in 12 sessions.

If none of these marks buoy Netflix stock, look at the $563 to $570 area. Those were the second-quarter and August highs, respectively.

The more support levels that Netflix stays above, the better. If it can maintain above the prior all-time high near $593, then it’s not out of the question that we see $650. That’s where the 161.8% extension of various range measures comes into play.

For now, there’s no reason to bet against this name, which has been the best-performing FAANG holding over the past month. With today’s move, it’s also the best-performing component of the group over the last three months.

Facebook, Amazon, Apple, Alphabet and Nvidia are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells FB, AMZN, AAPL, GOOGL or NVDA? Learn more now.