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Trends & Analysis
News

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News

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European stocks close at record high

News

Gold prices ease after hitting record high

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Week Ahead Preview: 17th of February

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Europe stocks hit record high on strong earnings

Asset Watch

Caution ahead of Netflix’s earnings?

Tuesday July 16, 2024

Q2 earnings season officially began last week, as the big banks kicked off the festivities. And with Netflix scheduled to report on Jul. 18, JPMorgan analyst Doug Anmuth has an overweight rating, raising his price target from $650 to $750. He wrote:
“We remain positive on Netflix shares heading into Q2 earnings on Thursday, 7/18, while also recognising high expectations… While Netflix’s current focus is sports entertainment & show content, we expect a bigger push into live sports over time,” which “should boost engagement across NFLX’s large global subscriber base & attract more ad dollars.”
While the long-term fundamentals remain healthy, the short-term price action is less optimistic.
Netflix closed below its 10-week moving average on Jul. 12, and the level has been a solid trend indicator over the last several months. When Netflix trades above the 10-week MA, long positions work out well for the bulls.

However, the last three times Netflix closed below its 10-week MA with large red candles (marked by the vertical white lines), more weakness followed in the days and weeks ahead. As a result, you should monitor the 10-week MA to see if the breakdown is reversed this week.

If not, trendline support is present in the $639 area (the upward-sloping yellow line), and a bounce could materialise there. After that, the April lows near $550 (the horizontal white line) could be where the bulls step back in.

So, with Netflix up by more than 30% year-to-date (YTD), could the Jul. 18 earnings report be a ‘sell the news’ event, or was last week’s pullback an isolated episode?


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