The Netflix (NFLX) - Get Report price gap higher today is not on earnings, but on a huge jump in subscriber growth. The stock is well above the previous all-time intraday high of $166.87 set on June 8. If the stock stays above this high, this momentum stock becomes parabolic and additional strength inflates what's called a "parabolic bubble."

The consensus among Wall Street analysts is that strong international growth will continue. However, Netflix faces the increasing cost of content, and the streaming media giant missed on earnings per share. International growth can be fickle, as family incomes abroad may be too low to afford a monthly subscription.

For now, shares of Netflix are forming a parabolic bubble, and bubbles always pop, so investors need an exit strategy.

The best example of a parabolic bubble is the Nasdaq in the year 2000. The Nasdaq Composite ended 1999 at 4,069 on a strong parabolic move. My call back then was that I could not say how high the Nasdaq could trade, but I showed risk to 3,500 to 3,000 at some point during the year. The high was 5,132 in March 2000, and a month later this parabolic bubble popped with the Nasdaq trading as low as 3,227 in April 2000. When the Nasdaq was above 5,000, my call was to reduce holdings by 50%.

Quiz: Where Were Your Favorite Netflix Series Filmed?

This shows how difficult it can be when an investor chases momentum. The weekly chart below tracks the inflating parabolic bubble for Netflix followed by my trading strategies.

The Weekly Chart for Netflix

Courtesy of MetaStock Xenith

The weekly chart for Netflix is projected to end this week positive with the stock above its five-week modified moving average (in red) at $159.50. The 12x3x3 weekly slow stochastic reading is projected to rise to 62.51 this week, up from 58.11 on July 14.

Trading strategy: The stock closed Monday above my monthly pivot of $160.81, which favored a positive reaction to earnings. With shares parabolic, I do not show a risky level at which to sell on strength. At some point, a risky level will form, perhaps as early as August. My semiannual pivot is $154.76, which has an 85% chance of being tested before the end of the year.

Investors should protect gains using a sell stop. Reduce holdings on a sell stop on a weekly close below the five-week modified moving average, now at $159.50. This moving average will be rising each week as the parabolic bubble inflates.

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This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.