Shares of Netflix (NFLX - Get Report) were pushing higher in Thursday trading after the company reported better-than-expected earnings. It's up just 3% to $295 though, with many of its gains evaporating.
After enduring a painful multi-month selloff, investors are hoping the declines are over in Netflix stock. Of the FAANG group, Netflix has badly lagged its peers over the past several months. Disney (DIS - Get Report) and Apple (AAPL - Get Report) launching new streaming services certainly didn't help investor sentiment.
Given the pre-earnings pounding and subsequent post-earnings pop, it's no surprise that Netflix is Real Money's Stock of the Day.
Investors won't have long to bask in the sun, though. Their prior concern was for another post-earnings tumble like the stock saw in July. Now the worry is whether NFLX stock can hold onto its gains.
The rally on Thursday now has Netflix above a few key technical measures, while still below others. Let's take a closer look at the charts.
Trading Netflix Stock
In the days before the company reported its third-quarter earnings, Netflix stock began a cautious advance. Shares rallied off the September lows, broke over downtrend resistance (blue line) and reclaimed the 20-day moving average.
However, Netflix stock was unable to reclaim the 50-day moving average and the 38.2% retracement. In after-hours trading, NFLX stock climbed as high as $318.79. In other words, it was rejected by the declining 100-day moving average.
After opening the regular-hours trading session north of $300, Netflix is under pressure after being rejected by the 50% retracement at $308.61. It would be very discouraging to see the stock lose all of its post-earnings gains. On the plus side though, all of this data gives us levels to measure against.
For instance, on the downside we know the must-hold level for NFLX stock is the 50-day moving average and the 38.2% retracement. Otherwise sub-$280 is on the table.
On the upside, Netflix stock must clear the 50% retracement and Thursday's high at $308.75. Above that area puts the after-hours high near $319 and the 100-day moving average on the table.
Timing when to buy is the hard part. Investors may feel more comfortable buying into support and improving their risk/reward. Likewise, they may feel more comfortable buying with momentum in their favor and thus, waiting for a move over the 50% retracement.