TECHNICAL ANALYSIS NETFLIX (NFLX)

Money Flow – has been in an uptrend.

Momentum has begun to turn upwards.

The stock price made a ‘Low’ in late November followed by a ‘Higher Low’ reflecting buyers were willing to come in at higher prices. We want to see the stock price break above the downwards trend to signal a reverse.

Why did the stock price pullback?

At moneywiseHQ it’s important to understand why a share price pulled back in order to identify whether there is an opportunity or a threat which invalidates the Investment Thesis.

NFLX is considered a ‘growth stock’, and was subject to the broader market selloff in high growth stocks such as Facebook, Apple, Amazon and Google.

The company has low exposure to US Federal interest rate increases or US/China trade war tariffs which is supported by the stock price remaining strong until almost two weeks after the broader market decline.

The primary catalyst coincided with the Disney Earnings Report which provided that Disney would be initiating it’s Disney+ subscription service. There has been a long term market concern of the affect on NFLX as a significant attraction to the Netflix library is the Disney portfolio. 

What does that mean at MONEYWISEHQ

The Investment Thesis for NFLX remain valid and the stock price pullback is an oportunity.

The pattern of a stock price pullback with each Disney+ headline is consistent. When combined with the broader market selloff in high growth stocks the pullback was accentuated.

Downside risk is defined near $260 with a Price Target 1 of 300, Price Target 2 of $330 and a full recovery above $360.

Maintain a disciplined ‘Stop Loss’ near $255.