Is Netflix at Risk of a Breakdown?
Netflix was obviously a big beneficiary of last year’s pandemic. It was one of the first to break out (mid-April) and one of the first to peak (early July). Now it may be at risk of breaking down and having a deeper pullback.
The first and most important thing on this chart is the bearish gap after the last earnings report. Profit and revenue beat as management raised prices. That kind of tinkering might work for a consumer-staple company or an industrial, but a growth stock needs to grow. And that’s where NFLX came up short, with subscribers up barely half the expected amount.
NFLX has not only failed to bounce after that gap. It’s also consolidated below its 200-day simple moving average (SMA), not once closing above it.
The current area also corresponds to an upward-sloping trendline that began in late June. Additionally, it’s near the “nice, round number” of $500.
Amazon.com and Apple are staggering as well, despite good results. Meanwhile, energy, materials, financials and industrials are pushing higher. It appears money is rotating away from Growth / FANG once again now that earnings have passed. With the economy reopening, that could be another risk for NFLX.
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The first and most important thing on this chart is the bearish gap after the last earnings report. Profit and revenue beat as management raised prices. That kind of tinkering might work for a consumer-staple company or an industrial, but a growth stock needs to grow. And that’s where NFLX came up short, with subscribers up barely half the expected amount.
NFLX has not only failed to bounce after that gap. It’s also consolidated below its 200-day simple moving average (SMA), not once closing above it.
The current area also corresponds to an upward-sloping trendline that began in late June. Additionally, it’s near the “nice, round number” of $500.
Amazon.com and Apple are staggering as well, despite good results. Meanwhile, energy, materials, financials and industrials are pushing higher. It appears money is rotating away from Growth / FANG once again now that earnings have passed. With the economy reopening, that could be another risk for NFLX.
TradeStation is a pioneer in the trading industry, providing access to stocks, options, futures and cryptocurrencies. See our Overview for more.
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