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Netflix’s Decline Not Even Halfway Through

By Dr. Arnout ter Schure Stock MarketsJan 21, 2022 01:58PM ET
www.investing.com/analysis/netflixs-decline-not-even-halfway-through-200615538
Netflix’s Decline Not Even Halfway Through
By Dr. Arnout ter Schure   |  Jan 21, 2022 01:58PM ET
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With today’s additional 20% plunge in Netflix's (NASDAQ:NFLX) share prices, after it already had lost 28.5% from its all-time highs by yesterday (!), it is time to revisit what my Elliott Wave Principle (EWP) work has to say about NFLX.

For that, I first need to go back precisely nine months, see here, when I last showed by using the EWP, Netflix would:

stay range bound and bottom around $440-$475 for (black) major wave-4 and then rally one last time for wave-5 to new all-time highs (targeting $600+). Once wave-5 of V is complete, I expect a long-lasting (think years) bear market bringing NFLX back to more sane levels of around $150-$250, depending on where it will exactly top (blue arrow and target zone).

What has happened during these nine months?

  1. NFLX bottomed on May 19, 2020, at $478.54.
  2. NFLX topped on November 17, 2020, at $700.99.
  3. NFLX is now trading at $390 and has lost over 43% of its value within only two months.

Thus, my EWP-based forecast from nine months ago (!) was as accurate and reliable as can be. It shows the Elliott Wave is primarily a fantastic forecasting tool for the intermediate- to long-term, as the shorter time frames are inherently more variable. No real surprise because the premise of the EWP is mass psychology, and that phenomenon does not express itself well in short time frames. Once again, establishing the EWP works (I really shouldn’t have to do that anymore as it works. Period), the logical question is: what’s next?

Figure 1 Netflix (NFLX) monthly candlestick chart with detailed EWP count and technical indicators.

NFLX Monthly Chart.
NFLX Monthly Chart.

Simple. Corrections on all time frames and bear markets are essentially prolonged corrections, always traveling in at least three waves: A, B, and C. The current 40% decline is, therefore, only wave-A. I anticipate NFLX to decline and stall out around $330+/-30 for (blue) Primary wave-A. See figure 1 above. This decline will mean a complete retrace of the rally since the COVID-19 low (March 2020). From there, I anticipated the B-wave (B for Bounce) to materialize and target the prior “congestion zone,” i.e., around where NFLX bottomed for (black) major wave-4 May last year.

But please remember, there’s no indication yet wave-A has bottomed, and in Bear markets, upside disappoints. Hence, the B-wave target zone is, for now, an average-based educated guess founded on well-known Fibonacci-based price patterns. Once more price data becomes available, both wave-A and B can be specified.

Regardless, once wave-B tops, wave-C (C is for Crash) must take hold and should bring Netflix’s share price down to around $175-200. But NFLX can revisit the double digits before Cycle wave-2 is done and dusted. At this stage, one is trying to look around multiple corners at once. Knowing that corrections are much more variable price structures than an impulse, one must be even more patient and open-minded.

However, we know from the EWP what to expect: three waves. And we know from the EWP how in general, each of these waves should behave and relate to each other. For now, we’ll let the market dictate the exact numbers, but just like in April last year, the general road map has been laid out. Back then, it worked wonders, so I continue to expect it to work well.

Lastly, Netflix is the poster child of what IMHO will happen to all the other FANMAG stocks and many others, eventually. Make no mistake. So please stay alert, and please always have a solid exit strategy in place because that will prevent one from sitting through potentially further losses like today.

Netflix’s Decline Not Even Halfway Through
 

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Netflix’s Decline Not Even Halfway Through

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Comments (7)
Star Boi
Star Boi Jan 23, 2022 6:22AM ET
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Another qualification that people with the impulse to talk nonsense neglect to read and understand, I quote from the NASDAQ 18000 article; "The index will have to move below the 76.40% Fibonacci-extension at $14,450 to start to suggest something more bearish is afoot. In case you haven't noticed the theoretical model is invalidated. So you can get off your donkey, you are already an ****
Star Boi
Star Boi Jan 23, 2022 6:13AM ET
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For the people who clearly have issues reading or comprehending anything, the theoretical 18000 NASDAQ article was a target premised and qualified on certain factors present at a point in time. The first clue for silly people was I quote; “the devil is in the detail, and the index can still try for one last stab lower, but if Monday's low holds, it is again time to look for an impulse move higher to $17400-18060.” So, one would surmise that this information which was speculative theory was no longer applicable. For the record I would rather believe and invest unicorns than listen to the foul air emanating from your orifice.
Boyoung Schang
Boyoung Schang Jan 23, 2022 2:48AM ET
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I have never bought NFLX due to the high price. If it goes down more, I will start buy a little by little the next few years. I hope it goes down to under 200. It's hard to predict the bottom.
Shane Zhang
Shane Zhang Jan 22, 2022 10:00AM ET
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how could be you were bullish in QQQ I though
Ethan Strong
Ethan Strong Jan 21, 2022 3:33PM ET
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Elliott Wave is like believing in unicorns and magic. 🪄💰
Mario Hispanicus
Mario Hispanicus Jan 21, 2022 2:54PM ET
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always the same story
Rob Fordham
Rob Fordham Jan 21, 2022 2:53PM ET
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So u also said nasdaq18k which would be impossible it ur theory on fang and maga come about can u explain
 
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