Investors are back in love with Netflix.
After weeks of the post-earnings blues, shares of the streaming giant rallied 12 percent last week in its best performance since January. The comes after the stock fell more than 20 percent from its June high to August low.
The charts suggest its recovery has legs, says Craig Johnson, chief market technician at Piper Jaffray.
"We'd be a buyer of this stock," Johnson told CNBC's "Trading Nation" on Friday. "No technical damage has been done. The primary trend is still up. This is just what I would define as a correction within the context of a longer-term uptrend."
Even with recent weakness, Netflix has had a strong performance this year. It remains 86 percent higher in 2018, though it was up by as much as 120 percent at its peak this year.
"The next two resistance levels come in around $370 and then a little bit more at $380 before you get back to the old highs, but we would be buying in this dip," said Johnson.
Netflix is still 3 percent from $370, a level not seen since July 20. It would need to add 6 percent from current levels to get to $380.
Not all market watchers are as bullish on the high-momentum FANG names of Facebook, Amazon, Netflix and Google parent Alphabet. Chad Morganlander, portfolio manager at Washington Crossing Advisors, sees a shift to value over growth stocks as benefiting other corners of the market.
"Valuation always matters and when you look at what investors are paying per unit of growth we think that you may want to look towards value stocks at this point," Morganlander said on "Trading Nation" on Friday.
Value investors favor stocks that have relatively cheap valuations relative to the rest of the market, while growth investors invest in stocks like Netflix or Amazon, which may have high valuations but are expected to expand at a faster pace than their peers.
"It doesn't mean that you have to sell all tech. In fact, there are seams of value there. You can go with the Ciscos of the world, the Oracles, or, for example, Microsoft but you just want to be somewhat more circumspect regarding growth stocks at this juncture," he added.
Netflix trades with a price-to-earnings ratio of 95 times forward earnings. Cisco, Oracle and Microsoft each trade at multiples below 25 times forward earnings.
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