Add to Your Netflix Long Position

Netflix stock looks poised to head higher.
By Richard Saintvilus ,

Investors who were waiting for a solid buy opportunity in Netflix (NFLX) - Get Report  now have their chance.

Shares of the movie-streaming company were punished Wednesday to the tune of about 4%, thanks to a downgrade by Laura Martin, analyst at Needham, who cited international subscriber growth fears and rising content costs.

Martin's bearish note follows an analyst note from Jefferies, which downgraded the stock from hold to underperform and warned about increasing competitive threats.

These recent headlines have sent Netflix stock back below its 100-day moving average -- an important psychological mark.

Though Netflix is said to lack in fundamentals, its technicals have made investors and traders tons of money.

Take a look at the chart below, courtesy of TradingView. 

Netflix stock closed Wednesday at $94.60, down 3.38%. The shares were falling by an additional 0.5% to $94.13 in Thursday morning trading. Netflix is down nearly 18% year to date.

The stock, which is up more than 3% in the past five days, is back above both the 20-day and 50-day moving averages at $92.89 (blue line) and $93.73 (pink line), respectively. While the stock is still about 2% below the 100-day at $96.36 (yellow line), the trend is generally bullish.

Netflix stock has come roaring back some 19% since bottoming out at $85 following Brexit fears and touching $101.27 on the announced content broadcasting pact with Comcast (CMCSA) - Get Report . Comcast is a holding in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio.

The analysts likely saw the 19% move as an overreaction and called the top. But the chart shows resistance is now at $103.30 (thin red line), which is about 9% higher than current levels. 

While Netflix shares are now taking a breather and consolidating from the post-Brexit rise, the stock's technicals are still intact. The company reports second-quarter earnings on July 18.

If you own the stock, average down by adding to your position. If you don't, get in now. It should go higher.

At around $94 to 95 per share, the stock looks poised to break resistance at $103 on a solid report and reclaim its April 15 high of $111.85, about 18% higher than it is now.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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