Netflix, Inc NFLX was sliding over 8% on Thursday after gapping down to start the trading day. The move came in tandem with the S&P 500, which also gapped down and was plunging about 2.5%.
The streaming giant has shown strength recently amid the release of several record-breaking series, including “The Addams Family”-based “Wednesday” and “Harry & Meghan,” a docuseries centered on the lives of Prince Harry, Duke of Sussex, and Meghan, Duchess of Sussex.
Netflix’s weakness could be due to a report that its new ad-tier service — launched in early November to make its streaming services more accessible for a larger number of households — is falling short on projected subscriptions.
The report indicates that Netflix is only seeing about 80% of its expected audience in certain cases, although the numbers vary by advertiser.
Netflix’s sharp decline caused the stock to negate the uptrend in which it had been trading since Oct. 13, when the stock reversed course off the $21
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The Netflix Chart: Although Netflix has negated its uptrend, the stock will need to bounce up to form a lower high under Tuesday’s higher high of $332.72 to confirm a downtrend is in the cards.
If Netflix continues to trend lower on Friday, the stock may find support and reverse at the 50-day simple moving average (SMA), which is trending at about $282.
- If Netflix slides down to the 50-day SMA, the stock will also have broken down from a rising channel pattern on the daily chart. If that occurs on higher-than-average volume, a larger decline into a longer-term downtrend could be on the horizon.
- Bullish traders want to see Netflix eventually print a bullish reversal candlestick, such as a doji or hammer candlestick, which could indicate a bounce is imminent. Bearish traders want to see big bearish volume push Netflix under the 50-day SMA, which could indicate a plunge to the 200-day SMA.
- Netflix has resistance above at $294.75 and $3e3.22 and support below at $265.80 and $246.65.
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