Is Netflix readying for a 15% drop?
Shares in Netflix are up more than 100% from the coronavirus pandemic low in March 2020 to the current high of 2021. However, the stock that outperformed during lockdowns is now feeling the pain as investors look to life after a successful coronavirus vaccine rollout.
Over the past several weeks we have seen a rotation out of high-flying tech stocks and into undervalued industrials. The long-term, weekly chart below shows the rally higher in Netflix’s share price before entering a trading range towards the end of 2020 which it is still in.
Source: Admiral Markets MetaTrader 5, #NFLX, Weekly - Data range: from Aug 4, 2013, to Mar 4, 2021, performed on Mar 4, 2021, at 8:30 pm GMT. Please note: Past performance is not a reliable indicator of future results.
From the top of the trading range around $573.00, it’s a roughly 23% drop to the bottom of the trading range around $466.00. As sellers have already started to take control, there’s still around 15% left for the price to fall further.
Some traders may choose to use Contracts for Difference (CFDs) and speculate on the price falling further by shorting the market. Some investors may consider waiting for the price to reach the bottom of the trading before buying more shares at a lower price.
Source: Admiral Markets MetaTrader 5, #NFLX, Daily - Data range: from May 22, 2020, to Mar 4, 2021, performed on Mar 4, 2021, at 8:30 pm GMT. Please note: Past performance is not a reliable indicator of future results.
The daily chart above shows the current range that has developed in Netflix’s share price more clearly. As the levels of upper resistance and lower support are well defined they provide interesting areas for traders and investors to lean against.
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