Jury Still Out on Whether Netflix Breaks Out

 | Jul 17, 2017 | 10:06 AM EDT
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We talked about Netflix Inc. (NFLX) last week and summed up our thoughts as follows: "NFLX is above the 40-week moving average line, so we know the trend is up based on math, but the pace of the rise has been slowing for months. Traders should be cautious with new positions on NFLX."

A week later and NFLX still is moving up and is now closer to making a new high. Let's check and see if the indicators have improved enough to be less guarded about the future.

In this daily bar chart of NFLX, above, updated through Friday, we can we see that prices are back above the slightly positive 50-day moving average line. The volume pattern has not shown a big pickup in the past week. The daily On-Balance-Volume (OBV) line has inched up recently but it has not led price with a new high in the OBV line before a new price high. The 12-day momentum study has just edged back into positive territory.

In this weekly chart of NFLX, above, we can see that prices are still above the rising 40-week moving average line -- no change from last week. The weekly OBV line is still flat and not lending support nor detracting from the rally. The lower panel shows the 12-week momentum study. Momentum did increase in the past week, but the pattern since October shows lower highs.

In this Point and Figure chart of NFLX, above, plotted through Friday, we can see that a trade at $168.38 is needed for a breakout and higher price targets.

Bottom line: NFLX is edging closer to an upside breakout. It could happen or it could fail. The juror is still out for now, but it could be returning soon.

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