How To Trade Netflix From Bear Market Territory

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Traded at its all-time high of $700.99 on November 17th. Since then, the stock traded as low as $526.32 on January 10, down 24.9%. The media company missed projected earnings-per-share in three of the last five quarters. Customer growth has exceeded expectations, but recent guidance was below estimates.

Operating margin is shrinking as the company increases spending on additional materials. Netflix is ​​trying to offset this by adding gaming applications.

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According to Macrotrends, Netflix has a P/E ratio of 48.74% and does not offer dividends.

daily chart for netflix

The daily chart for Netflix shows a drop to $478.54 on May 19, 2021, followed by a rally to its all-time high of $700.99 on November 17th. It was then set to drop by 24.9% at $526.32 on January 10th.

The rally was fueled by a golden cross set on August 18, 2021, when the 50-day simple moving average rose above the 200-day simple moving average. The downside correction failed to sustain the 50-day simple moving average on December 1. There was a price gap below the 200-day SMA on January 6. The price level for the week held on Monday, January 10 was $527.08.

If this weekly level is on the upside then the yearly pivot at $573.13. These two levels are the bottom two horizontal lines.

weekly chart for netflix

The weekly chart is negative for Netflix, with the stock trading below its five-week revised moving average at $590.74. A reversal to the 200-week simple moving average or mean is at $422.20. The 12x3x3 Weekly Slow Stochastic reading is declining at 21.46 and will be oversold if the reading falls below 20.00.

Trading Strategy: Weakness buys at the weekly price level at $527.08 and strongly reduce holdings on their yearly pivot at $573.13.


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