It was only last week on January 20 when we reviewed the charts of Netflix (NFLX) ahead of earnings. Our bottom line advice was that "NFLX has made a big decline and is oversold using tools like the stochastic indicator, but there has been no slowing in the pace of the decline - no bullish divergence from the 12-day momentum indicator. I have no special knowledge of what the numbers are going to be tonight but I am finding no technical reasons to buy the stock. Avoid."
Prices plunged sharply lower so another check of the charts is in order.
In this updated daily bar chart of NFLX, below, we can see that prices gapped sharply lower and have continued to weaken. Daily trading volume surged with a capital "S" as traders and investors jumped ship. The On-Balance-Volume (OBV) line continued its decline from November. The Moving Average Convergence Divergence (MACD) oscillator remains in a bearish alignment below the zero line.
In this weekly Japanese candlestick chart of NFLX, below, we can see a bearish picture. The most recent big red candle (bearish) tells you that the bearish are in charge. The middle of this big candle or around the $450 area is going to act as resistance.
The 40-week moving average line is bearish and the OBV line too. The MACD oscillator is quickly sinking down to the zero line.
In this daily Point and Figure chart of NFLX, below, we can see a $350 price target.
In this weekly Point and Figure chart of NFLX, below, we can see that the software is suggesting a price target of $0 - zero. We will have to visit this chart again.
Bottom line strategy: Continue to avoid the long side of NFLX. The next logical price target is the $300 area.
