NEW YORK ( TheStreet) -- Shares of Netflix (NFLX) - Get Report are showing early signs of exhaustion. So far this week the stock remains near last week's all-time highs, but momentum appears to be easing.
Considering the extent of the huge ramp off the last month's low, without much of a pullback, a rest is well-deserved.
At last week's peak near $630, NFLX had gained over $200 in just over six weeks. This 50% move began with a short-term base near the stock's 200-day moving average before getting a major jolt on April 16.
The stock ramped 16% that day on its heaviest trade since early 2013. This earnings-inspired breakout drove shares well past its 2014/initial-2015 highs. Netflix consolidated in late April before moving to new highs again earlier this month.
On May 15, news of a China deal sparked another high-volume upside gap. The stock floated higher in the aftermath but now appears to have lost all of this most recent momentum.
A healthy pullback now seems likely before shares are in a position to make a move well into new high ground.
Here's what The Street's Jim Cramer had to say about Netflix:
"As a long time supporter of this stock, I recognize that sometimes it just gets exhausted. This seems to be one of those times, as there is a news flow vacuum and it has run a great deal on China 'love.' I think it's resting, no more than that."
On the weekly charts the MACD is marking an all-time high far exceeding the level reached in early 2014. At that time, NFLX was finishing off a bull leg that carried the stock more than 40% higher during that year's first quarter.
Netflix has a very solid support zone in place near between $587.50 and $576. This area includes the April high as well as the May 15 breakout gap. While it's certainly possible for NFLX to drift higher in the near term, some patience may provide for lower-risk entry.
At the time of publication, Morrow had no positions in the stocks mentioned.