Netflix (“NFLX”) is a great example of why trend following is such an important tool in today’s volatile market. Clearly the majority of the market has lost faith in the company – way before fundamental analysts will report a slow down in earnings (and probably downgrade the stock – months after the price collapse).
Even if investors hoped Netflix would bounce back after the trend was broken, the break below the 200 day moving average should have been a clear indicator to run for the exit. Remember – “The Trend Is Your Friend”.
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