Tech stocks rebounded hard on Tuesday, though the FANG names remain sharply off their records.
Facebook has been the worst hit, steeped in a bear market having fallen 23% from its all-time highs, while Amazon, Netflix and Alphabet have dropped at least 16%.
One of those names could be primed for a major comeback, says Todd Gordon, founder of TradingAnalysis.com.
“Netflix has been in a bit of a consolidation, but relative to the broader market, it’s showing some pretty good relative strength here,” Gordon told CNBC’s “Trading Nation ” on Tuesday. “So should the market begin to stabilize, Netflix might be able to make a push up here.”
The 200-day moving average appears to be holding as support, Gordon explained. Netflix came close to touching that level in February, March and April but bounced each time. It briefly broke below it during Monday’s session but has since recouped those losses.
A longer-term look at the charts also suggest upside here, says Gordon.
Netflix is “nowhere near the 200-week moving average, but it’s the same kind of situation. We’re right down in the 50-week moving average, we held it as support, buyers are starting to come in here,” he said. “Technical support combined with the relative strength of Netflix compared to the Nasdaq … makes sense for a trade on the upside for me.”
Gordon is buying the July 19 expiration 370 call and selling the 380 call for $3.55. This is a bullish bet that shares of Netflix will rally as high as $380 by July expiration.