Stock of the day: Netflix
12 October 2023
Netflix, a renowned streaming titan, is currently bucking the broader market trend. While a slew of stocks are reveling in the ongoing bullish rally on indices, Netflix appears to be taking a back seat. Delving into the technicals paints a clearer picture of this anomaly.
Historically, the long-term uptrend line (black) has played a pivotal role for Netflix, acting as a solid support. However, recent movements deviate from this pattern. Instead of testing this line from above, Netflix has challenged it from beneath, underscoring the fact that it's now trading below this crucial line. This test resulted in a clear rejection, a bearish hint for traders and investors.
Further compounding the bearish sentiment is the formation of a bearish engulfing pattern. Colored in green on the chart for clarity, this pattern is a classic bearish reversal signal. Yesterday's trading activity served to cement the bearish bias, with Netflix carving out new mid-term lows. The stock didn't just trickle lower; it nosedived, firmly settling beneath the significant $376 horizontal resistance (orange).
Taking stock of these technical signals - the breach below the long-term uptrend line, the formation of the bearish engulfing pattern, and the decisive move below a key resistance - Netflix's outlook is currently skewing bearish. Investors and traders alike should approach this stock with caution, keeping these critical technical markers in mind.