NETFLIX: First warning of the END of the retracement!
On January 22, Netflix presented results that widely beat market estimates:
--> Sales 10,247 million dollars (+16% YoY) vs. 10,106 million dollars estimated by the consensus and 10,128 million dollars estimated by the company.
--> EBIT 2,243 million dollars (+52%) vs. 2,200 million dollars consensus and 2,190 million dollars estimated by the company.
--> BNA 1,869 million dollars (+99%) vs. 1,830 million dollars consensus and 1,847 million dollars estimated by the company.
--> EPS 4.27 dollars (+102%) vs. 4.18 dollars consensus and 4.23 dollars estimated by the company.
New subscriptions reach +18.9M, +44% YoY, vs. +9.2M expected. As anticipated by the Company, this is the last quarter in which it will publish this data. Total subscriptions exceed 301M (+15.9% YoY).
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The share price reached its historical maximum on February 18th at 1,064 and has not stopped falling since then, due to the fact that the Nasdaq index began a correction caused mainly by the volatility generated by trade tariffs.
--> What is the technical situation?
The technical aspect is CLEARLY BULLISH and any setback in the price will be a good opportunity to enter the stock.
It has reached a 50% Fibonacci retracement (945), an area that it has respected, and that therefore, can be taken as the LOWER to start a NEW BULLISH IMPULSE.
--> What risks does it have?
Trump's TARIFFS, since they can cause falls in the NASDAQ INDEX that drag down the entire market. But the Nasdaq index is in a VERY PROBABLE LOWER area, so the ENTIRE market could rise strongly in the next few days.
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Strategy to follow:
ENTRY: We will open 2 long positions if the H4 candle closes above 992
POSITION 1 (TP1): We close the first position in the maximum area (1,061) (+7%)
--> Stop Loss at 940 (-5%).
POSITION 2 (TP2): We open a Trailing Stop type position.
--> Initial dynamic Stop Loss at (-5%) (coinciding with the 940 of position 1).
--> We modify the dynamic Stop Loss to (-1%) when the price reaches TP1 (1,061).
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SET UP EXPLANATIONS
*** How do we know which 2 long positions to open? Let's take an example: If we want to invest 2,000 euros in the stock, what we do is divide that amount by 2, and instead of opening 1 position of 2,000, we will open 2 positions of 1,000 each.
*** What is a Trailing Stop? A Trailing Stop allows a trade to continue gaining value when the market price moves in a favorable direction, but automatically closes the trade if the market price suddenly moves in an unfavorable direction by a certain distance. That certain distance is the dynamic Stop Loss.
-->Example: If the dynamic Stop Loss is at -1%, it means that if the price drops by -1%, the position will be closed. If the price rises, the Stop Loss also rises to maintain that -1% in the rises, therefore, the risk is increasingly lower until the position becomes profitable. In this way, very solid and stable price trends can be taken advantage of, maximizing profits.
