On Wednesday Netflix (NFLX) announced that it was partnering with software giant Microsoft (MSFT) to be its global ad sales and technology partner. Let's check out the charts of NFLX.
In this daily bar chart of NFLX, below, we used a log scale to show the dramatic decline in price. NFLX made a low in May and a successful retest in June. Prices pulled back again in July but are holding, so far, above the May-June lows. The slopes of both the 50-day and the 200-day moving averages are negative.
The daily On-Balance-Volume (OBV) line has been stable since late April. The 12-day price momentum study shows higher lows from May for a bullish divergence when compared to the price action making equal lows.
In this weekly Japanese candlestick chart of NFLX, below, we can see a couple lower shadows telling me that some traders are rejecting the lows - this is a positive development. The OBV line has been steady since May. The 12-week momentum study shows higher lows since January suggesting that prices are stabilizing and could be poised for a bounce.
In this daily Point and Figure chart of NFLX, below, we can see a downside price target in the $151 area.
In this weekly Point and Figure chart of NFLX, below, we can see a potential price target in the $124 area.
Bottom line strategy: I am not sure that one deal can cure what ails NFLX, but it can only help in my opinion. Maybe the worst is behind us.
