Netflix, Inc. Technicals Suddenly Weakening
Netflix, Inc. (NASDAQ: NFLX) shares have taken a turn for the worse over the last few sessions, breaking and closing below its short-term uptrend line support at around $465. How bad will it get before the bulls take over again?
- The bulls were in love with Netflix's ability to put out bullish news/announcements on a consistent basis. They love the company's estimated 2015 revenue growth of 25 percent to 30 percent, and they were comforted by Netflix's very strong technicals.
- The bears, meanwhile, were screaming about the company's 70 P/E, 5.84 price-to-book and 17.74 price-to-sales ratios. They noted the stock's technically overbought condition.
- Technicians set the upside target for Netflix at approximately $550 per share, the upper edge of a long-term uptrend channel. They put support at the short-term uptrend line of $446-$457.
Since the last Netflix report on September 11, the stock has turned south in a rather out-of-the-blue fashion. It broke and closed below the technicians' short-term uptrend line support that came in at $465. All that means is that the stock has shifted to a more neutral stance in the short term.
According to technicians, the first support now comes in at the horizontal line at $417.57. More substantial support, however, comes into play at the $372.90 level, created by both horizontal line support and the longer-term uptrend line.
Resistance for the stock now comes in at the underbelly of the broken short-term uptrend line at around $466, but that resistance price will increase each day (see chart below).
Netflix may still be a "buy the dip" situation for traders and investors, but the price at which serious support will come into play is obviously going to be lower than technicians previously thought.
Shares traded recently at $451.81.
© 2016 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.