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Netflix's Initial Decline Runs Its Course: Time To Look For Higher Prices?

Published 04/19/2022, 03:23 PM
Updated 07/09/2023, 06:31 AM

With today’s earnings after hours, it is time to assess if there’s more pain stored for Netflix (NASDAQ:NFLX).

Using the Elliott Wave Principle (EWP), I found in January (see here):

I anticipate NFLX to decline and stall out around $330+/-30 for (blue) Primary wave-A. 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.

The reaction to earnings today may well be the catalyst to get things going. Over the past month, NFLX has bottomed twice at around $330 and inside the ideal (black) target zone. Bingo!

Besides, using the daily chart (See Figure 1 below), the EWP count shows the share price of NFLX has done enough waves (five) down to suggest the anticipated blue Primary wave-A has bottomed and wave-B should soon be underway.

The blue arrows show the expected ideal path for wave-B, but please remember that B-waves are often overlapping, tricky patterns as they comprise three waves: a-b-c.

Figure 1 NETFLIX (NFLX) daily candlestick chart with detailed EWP count and technical indicators.NFLX Daily Chart

A breakout above the late March highs (~$390) would be an excellent sign the larger dead cat bounce is underway to ideally around $470-560. Why the range? It is at this stage impossible to know how much this B-wave will retrace wave-A. It could even target the 23.60% or 76.40% levels ($420, $630, respectively). But we start with a nice typical in the middle level. The anticipate.

Then we monitor the price action to see what retrace level will be the most likely target and adjust, if necessary.

For now, the most likely path is higher, i.e., I, therefore, expect minimal downside risk vs. upside reward. But please remember:

“In bear markets, downside surprises and upside disappoints.”

Why? Because selling pressure dominates.

However, as said in January, once wave-B tops, wave-C (C is for Crash) must take hold and 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. However, from my January update, we knew from the EWP to expect three waves (A, B, C). And how in general, each of these waves should behave and relate to each other. With enough sub-waves complete for wave-A, it is now necessary to anticipate wave B in more detail.

Latest comments

its $180 now
I guess wave C is already playing.
Global pandemic called inflation. Demand destruction is slowly creeping in.
This one didnt age well. Note to self: never subscribe to anything from this dude
Dude, unrelated to this article but it's still you.. your last update on the S&P 500 you alluded to selling into strength because of an overlap that shouldn't be.. I wanted you to be wrong because I was already in the red but because of the extended seesaw action & 4330 breach, I finally sold all my positions at a major loss!!! ( because you also missed the initial going to 5100 I was still holding on from first hit of 4600 ).. do you get paid so much money for these articles that you keep writing after people lose so much money because of your calls?? I discovered you late and this cycle so I did not get the benefit of your correct early upsides of the major waves so I had to get my schooling ( a very expensive school, brrr ) during this brutal fourth major wave of which is there actually a 5th Wave?? okay fine you are generally 70% right but you just cannot be wrong about the last major way because people give it all back! Dude, don't publish opinions unless you're 1,000% sure!!
$191 is the target...
Why didn't you wait for the report?
How much Netflix paid to you?
wrong lol
Wammy
Well, I am the first to admit mistake. The negative reaction AH (-23%) means NFLX is most likely dealing with a continued subdividing 5th of wave-A lower. Indeed as I wrote, "In bear markets, downside surprises and upside disappoints.” That certainly was a surprise, as there were technically enough waves in place to consider wave-A complete. Back to the drawing board... Oh well...
The huge miss on subscribers makes it a fundemental issue- not technical
IMO 700 will never be sniffed again. Too much competition and they will never get the favorable back drop like they did during the pandemic ever again
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