Connect with us

Hi, what are you looking for?

Wealthy Nation TodayWealthy Nation Today

Stock News

Netflix Gets Island Reversal On Earnings

Netflix (NFLX) earnings were released today, and the news was good. . . except for one little thing. They also suspiciously announced that, starting next year, they would no longer be reporting subscriber metrics. That’s like General Motors saying that they will no longer report how many cars and trucks they made. I admit that some other aspect of the report could be a contributing factor for the crash, but let’s look at the technicals.

After the gap up in January, price formed a three-month island that drifted higher, but all was not well technically. The falling PMO formed a negative divergence against the rising price. When the PMO falls above the zero line, it is telling us that the strength behind the up move is diminishing.

Also, the On-Balance Volume (OBV) went flat to slightly falling. OBV usually tracks price, and when it doesn’t, it should attract our attention. In this case, it is suggesting that NFLX is not attracting sufficient volume to justify the rise in price.

Conclusion: Gaps don’t always result in island reversals. For example, there was a gap up in October, following which a very similar island was formed. However, in January price gapped up from that island instead of reversing. In the case of the latest island, OBV sent up the warning flag.

Learn more about

Watch the latest episode of the DecisionPointTrading Room on DP’s YouTube channel here!

Try us out for two weeks with a trial subscription!

Use coupon code: DPTRIAL2 at checkout!

Technical Analysis is a windsock, not a crystal ball. –Carl Swenlin

(c) Copyright 2024

Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.

DecisionPoint is not a registered investment advisor. Investment and trading decisions are solely your responsibility. DecisionPoint newsletters, blogs or website materials should NOT be interpreted as a recommendation or solicitation to buy or sell any security or to take any specific action.

Helpful DecisionPoint Links:

Trend Models

Price Momentum Oscillator (PMO)

On Balance Volume

Swenlin Trading Oscillators (STO-B and STO-V)


SCTR Ranking

Bear Market Rules

You May Also Like

Stock News

In this edition of StockCharts TV‘s The Final Bar, Dave answers questions from The Final Bar Mailbag. Today he talks about how to use the ADX...

Stock News

In the previous technical note, it was categorically mentioned that while the markets may attempt to inch higher, they may not form anything beyond...

Stock News

My preference is to trade strong stocks that are simply consolidating and ridding themselves of weak hands, hopefully just in time to ride the...

Investing News

Covered calls are popular among investors looking for a conservative way to generate additional income from their stock holdings. However, it’s essential to understand...