NFLX– about 5 hours prior to its earnings report, NFLX is in an interesting technical position approximately 4% above very important near term support in the vicinity of 342.00 versus 6.4% beneath its March “recovery” rally high at 379.80, which represented a whopping 65% upmove off of its 12/24/18 low at 230.00. As we speak, NFLX is trading at 357.50, only 55% above the low just four months ago.
On one hand, all of the action in NFLX since late January could be construed as a rolling top formation that has found support in the vicinity of 342 on multiple occasions, but if violated, will trigger long liquidation that will point the price structure to 290-300. On the other hand, as long as 342.00 contains any forthcoming weakness, NFLX looks poised to probe key nearer termresistancelodged between 370 and 380, which if taken out will point towards a run at multiple and multi-month prior peaks from 400 to 423.50.
We have to give the benefit of the doubt to a positive reaction to tonight’s earnings report, especially in a market that rarely displays or sustains weakness for longer than a few hours. That said, however, the BIG QUESTION for me is just that– whether or not a positive reaction to NFLX earnings can thrust the stock above 380 for longer than a few trading hours? If not, then expect NFLX to orchestrate a painful head fake before seeking 300 to 280, a 15% to 20% haircut from current levels.
The “head fake” or “sell-the-news” scenario is certainly prevalent in NFLX DNA from past earnings reactions… Last is 357.82