Netflix – Potential Market Underestimated

Netflix – Potential Market Underestimated

Internet television network Netflix (NFLX) received a price-target increase to its stock Thursday from investment bank Morgan Stanley, which thinks the market isn’t fully appreciating the company’s “potential for materially higher earnings power.”

Netflix fell 0.3% to 158.21 on the stock market today.

Netflix climbed above its 50-day moving average in a bullish sign on Wednesday. It has been forming a flat base over the past six weeks with a buy point of 166.97. Netflix hit a record high of 166.87 on June 9. There’s a strong correlation between Netflix’s growing content library and its subscriber growth and market penetration. Netflix had $11 billion in net content assets as of the end of 2016.

Netflix’s paid subscriber base in the Asia-Pacific region is hovering around 4.8 million. That’s only 1.4% of the region’s total paid online video subscribers of 341 million, it said.

Technical Analysis

Overall, the bias in prices is: Upwards.

Short term: Prices are moving.

Intermediate term: Prices are ranging.

The projected upper bound is: 169.26.

The projected lower bound is: 153.20.

The projected closing price is: 161.23.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 23 white candles and 27 black candles for a net of 4 black candles.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 94.4626. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 5 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 61.54. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 44 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 137.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a buy 5 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 3 period(s) ago.

Rex Takasugi – TD Profile

NETFLIX INC closed up 2.910 at 161.120. Volume was 7% below average (neutral) and Bollinger Bands were 18% wider than normal.

Open       High       Low        Close      Volume
159.300  161.350  157.970  161.120  5,549,221

Technical Outlook
Short Term:               Overbought
Intermediate Term: Bearish
Long Term:                Bullish

Moving Averages: 10-period  50-period  200-period
Close:                       152.47        156.72        137.63
Volatility:                30                33               38
Volume:                   5,578,739  5,694,813  7,053,013

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

NETFLIX INC is currently 17.1% above its 200-period moving average and is in an downward trend. Volatility is high as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of NFLX.O at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on NFLX.O and have had this outlook for the last 22 periods.

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Ivy Heffernan

Ivy Heffernan, student of Economics at Buckingham University. Junior Analyst at HeffX and experienced marketing director.

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