Tuesday, July 23, 2013

Netflix (NFLX)...

Netflix (NFLX), the best performing stock on the S+P 500 year to date, reported it's earnings after the bell yesterday. According to Forbes "The company reported earnings per share of 49 cents on $1.07 billion in sales. Analysts had expected earnings per share of $0.40, on revenue of $1.07 billion. In the year-ago period, Netflix earned 11 cents per share on revenue of $889 million. The company added 630,00 U.S. subscribers in the quarter, boosted by the latest season of Arrested Development, CEO Reed Hastings said in an investor letter. Investors sold on the new subscribers number, which missed some analysts’ expectations."

This mornings price action in NFLX has been volatile. It opened up right around a strong support level indicated on the above chart as a prior swing high. It later retraced the full amount of the sell off, in turn closing it's price gap from yesterday's session. NFLX continues to be in a very strong uptrend, but on the flip side it's been up some 180% or so year to date, so it's probably not a name you want to chase too strongly.

If price is unable to hold the $248 support area, look for a drop to around the $227-$232 area which represents an equal sized drop as the last two sell offs in NFLX highlighted on the chart, matched up with a previously open gap and a prior swing high as confluence. As long as one of these support levels holds I don't see any reason why this stock can't hit it's next upside targets around $292-$300.

A failure at $227 would probably mean that a drop to $200 and lower is underway. As always, time will tell.