For S&P 500, the Longer the Base, the Higher the Space

"If you personalize losses, you can't trade." -- Bruce Kovner

NEW YORK (TheStreet) -- It was a quiet start to the week, with limited range in the indices and stocks for the most part. But we do have Chipotle Mexican Grill (CMG) and Netflix (NFLX) reporting tonight.

Those two companies can move fast and hard, and we may be able to get a trade off in them Tuesday.

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Google (GOOG) (GOOGL) hasn't really done much since reporting Thursday night. This earnings season may not give us the action we are accustomed to during reporting times.

More basing action is fine. We just have to be patient and wait for buy points to come.

The longer the base, the higher the space, as they say. And that just means that a long base leads to a much longer and stronger move when it does finally begin.

Sitting in cash and keeping your account and emotional capital intact -- instead of getting chopped up -- is truly a skill to learn. That will take you from being a marginal trader to a spectacularly profitable one.

The S&P 500 SPDR ETF (SPY) remains in a tight range. Above $198.30 is good, while a move under the 21-day average isn't.

There isn't much else to say about that, as the summer of slow action continues. Thank you for reading.

At the time of publication, the author held no positions in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

TheStreet Ratings team rates NETFLIX INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate NETFLIX INC (NFLX) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and impressive record of earnings per share growth. However, as a counter to these strengths, we find that the company has favored debt over equity in the management of its balance sheet."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 4.8%. Since the same quarter one year prior, revenues rose by 24.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 1620.00% and other important driving factors, this stock has surged by 63.98% over the past year, outperforming the rise in the S&P 500 Index during the same period. Although NFLX had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
  • NFLX's debt-to-equity ratio of 0.61 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.74 is weak.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. When compared to other companies in the Internet & Catalog Retail industry and the overall market, NETFLIX INC's return on equity is below that of both the industry average and the S&P 500.

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