How the Market Missed Netflix’s Quiet 140% Rally

[Trading With Larry Benedict]( How the Market Missed Netflix’s Quiet 140% Rally By Larry Benedict, editor, Trading With Larry Benedict A little over a year ago, streaming giant Netflix (NFLX) could hardly stay out of the news… but for all the wrong reasons. Disappointing results set off a slew of analyst downgrades. As a result, investors abandoned the stock in droves. By the time NFLX started to bottom out in May 2022, it had plummeted near 80% from its all-time high just six months prior. Yet NFLX steadily and quietly climbed higher throughout 2022… a rally that carried over into the start of 2023 and that many missed. But recently, NFLX has retraced. So today, we’ll check out what’s coming next… Recommended Link [17 facts to help you make sense of our chaotic world]( [image]( Economist, investigative journalist, and expert investor Dr. Nomi Prins says there are “17 reasons why you need to devour Peter Zeihan’s new book, The End of the World Is Just the Beginning.” [Find out why here.]( -- Gapping Down On the chart below, you can see NFLX’s huge gap down after releasing its disappointing Q1 2022 results. At the peak of that fall, NFLX shares were down near 40% in a single trading session... Netflix (NFLX) [Image] Source: eSignal This strong sell-off put our momentum indicator, the Relative Strength Index (RSI), well into oversold territory (below the lower grey dashed line). Yet buying momentum started to return (red line), and the RSI began to track higher. So NFLX was able to build a base. Then, NFLX began to rally in July. The RSI broke through resistance (green line) and gained traction in the upper half of its range. From there, NFLX’s rally to its February 3 peak at ‘A’ brought the stock up 140% from its lows. This movement coincided with two key bullish signals… - The RSI tracked predominantly in its upper range. - The 10-day moving average (MA – red line) broke above (and mainly stayed above) the longer-term 50-day MA (blue line). Both also trended higher. But as we came into 2023, another RSI pattern started to unfold… As NFLX made higher highs (upper orange line), the RSI made lower highs (lower orange line). Take another look at the chart… Netflix (NFLX) [Image] Source: eSignal When these two diverge, a change of direction is often on the cards. So with buying momentum declining, NFLX started to pull back from its peak at ‘A.’ That down leg gathered momentum as the RSI fell back into its lower range. And the 10-day MA added to the bearish sentiment by crossing back below the 50-day MA. However, NFLX’s pullback bottomed out at ‘B’ with the RSI making a ‘V’ in oversold territory. Then, the RSI crept higher, dragging NFLX with it. But now, momentum is stalling. So what can we expect from here? [The One Ticker Retirement Plan Over the Shoulder Demo Now Available]( Free Trading Resources Have you checked out Larry's free trading resources on his website? It contains a full trading glossary to help kickstart your trading career – at zero cost to you. Just [click here]( to check it out. Regaining Momentum? As the chart shows, NFLX has recently rallied up its longer-term 50-day MA. For NFLX’s rally to regain momentum, it must break through the 50-day MA and bring the 10-day MA up with it. But that all depends on the RSI (red circle)… The RSI is now tracking right around support/resistance (green line). For NFLX to rally from here, the RSI must regain its footing in its upper range (and stay there), like it did from July 2022 to February 2023. However, if the RSI falls back into its lower range, then NFLX’s current rally will likely roll over. And a prolonged stay in the RSI’s lower band could see NFLX take out its recent low at ‘B.’ Regards, Larry Benedict Editor, Trading With Larry Benedict Reader Mailbag What are your predictions for Netflix? Let us know your thoughts – and any questions you have – at feedback@opportunistictrader.com. IN CASE YOU MISSED IT… Millionaire Trader Reveals: [How to Make One “Backdoor” Currency Trade – Every Month – And Start Making All the Money You Need to Fund Your Retirement]( [Click here for the name of the currency trade.]( [image]( [The Opportunistic Trader]( The Opportunistic Trader 55 NE 5th Avenue, Delray Beach, FL 33483 [www.opportunistictrader.com]( To ensure our emails continue reaching your inbox, please [add our email address]( to your address book. This editorial email containing advertisements was sent to {EMAIL} because you subscribed to this service. To stop receiving these emails, click [here](. The Opportunistic Trader welcomes your feedback and questions. 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