While the stock has not exactly been breaking down, the pandemic-fueled rally it enjoyed in the second quarter of 2020 has been stalled for quite some time.
It also comes as we’ve seen strong gains in many FAANG holdings. Facebook (FB) - Get Report and Alphabet (GOOGL) - Get Report have hit new highs, while Apple (AAPL) - Get Report is starting to wake up. Amazon (AMZN) - Get Report is trading better too.
So what’s up with Netflix? Simply put, there doesn’t seem to be a meaningful catalyst to take it higher at the moment.
While the company did announce a partnership with Steven Spielberg’s Amblin Partners, shares are still lower on the day despite the news.
The deal will hopefully help Netflix pull in more Oscar awards in the future - and hopefully help the stock find its groove.
The weekly chart does a really good job showing the big picture with this stock. Netflix shares exploded higher almost a year ago in early July, hitting $575 before pulling back.
Little did investors likely realize that while the overall stock market has been pacing higher, Netflix would be range-bound for nearly a year. In fact, almost 12 full months later and the stock is still about 16% below that $575 high from July.
While shares remain mostly stuck in a range between $475 and $550, we’ve seen some of the positives - like a rising trend and supportive moving averages - turn into negatives.
Will the Spielberg news turn things around? It’s possible, but I wouldn’t bank on it at this point.
Uptrend support (blue line) failed as support in April and turned to resistance in May. Same with the 50-week moving average, while the 10-week moving average continues to squeeze Netflix stock lower.
On the plus side, shares remain responsive off the $475 area and are putting in a series of higher lows (albeit, barely). A move over the 10-week moving average is what bulls really need to see at this point.
If the stock can do that, we can start to get some sort of rotation higher. So far, we’re looking at an inside month, with the June range completely contained within the stock’s trading range in May.
If we can get an inside-and-up rotation in July, that could really spur Netflix over some of these key moving averages and get investors looking for a larger move higher. Above $530 and the $560 to $575 could be in play.
Below $475 and Netflix may struggle even more.