A pullback to one key level could trigger a record rally for Netflix

Netflix enters its earnings report after the bell in good shape.

It has rallied more than 30 percent in January in the best performance of a FANG stock by a mile.

The stock would need to pull back to one key level before it can roar back to records, though, says Todd Gordon, founder of TradingAnalysis.com.

"I can't wait to buy it in a pullback and I hope I get it back towards around $330 to $325. I do hope we hit that oversold pullback in order to take us to new highs," Gordon told CNBC's "Trading Nation" on Thursday. "It's so extended here. You can't buy it, it's hard to sell it so that's why I like trading options right now."

That range has acted as resistance since Netflix last hit a low of $310 in August 2018. It broke firmly above it this week. A drop back down to $325 represents an 8 percent selloff.

That swing to the downside could come as soon as Friday given the high potential for volatile swings following earnings, says Gordon. The options market is expecting a $27 move higher or lower. A move that large to the downside would take Netflix prices down to Gordon's $325 a share buy signal.

Mark Tepper, president of Strategic Wealth Partners, is a long-term bull on Netflix, but its outsized move in recent weeks has him nervous.

"I would be a seller of this thing ahead of earnings. It's up 50 percent since Christmas Eve so I think a lot of the good news has already been priced in," Tepper said on "Trading Nation" on Thursday.

The company's announcement of a price hike days before its earnings release also has Tepper concerned.

"The timing of that price hike strikes me as very, very odd. Rolling that out a few days before earnings has me wondering. It has me concerned that they might underwhelm us on subscriber growth," he explained.

Netflix said on Tuesday that it would raise prices for its subscription plans. The most popular plan will now cost $13 a month, up from $11, in what was its largest increase ever.

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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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