Video streaming giant Netflix, Inc. reported quarterly results after the close on Jan. 22 and did not disappoint. The stock closed Jan. 22 at $227.58 and opened Jan. 23 at $255.05 for a 12% price gap higher. This upward momentum was consolidated, with the stock trading as low as $236.11 on Feb. 9.
Momentum rang supreme from that low, as the stock rallied 41% to set its all-time intraday high of $333.98 on March 12. At the high, the weekly chart showed that momentum (12 x 3 x 3 weekly slow stochastic) was above 90 on a scale of 0 to 100, so the chart indicated that Netflix stock was in an “inflating parabolic bubble.”
At Monday’s close of $280.29, Netflix stock is up 46% year to date but is also in correction territory at 16.1% below its March 12 high of $333.98. The shares are up 18.7% since the Feb. 8 low of $236.11. The stock was around my quarterly pivot of $247.78 in pre-market trading this morning. Recent share price weakness has been caused by nervous investors concerned about a potential trade war with China. (See also: Netflix Sell-Off Could Signal Deep Correction.)
Netflix is not a value stock, as its P/E ratio is elevated at 236.28, and will likely lose its classification as a momentum stock this week. …read more
Read more here: Netflix in Correction, but Still Huge 2018 Leader