As Netflix Streams Higher, Market Cycles Suggest Pullback
Steve Miller | Jan 15, 2019 03:06PM ET
Summary:
- Netflix (NASDAQ:NFLX) soared on Tuesday morning, trading 6% higher after the media company raised the price of its services.
- However, its market cycles are in a negative structure, with continued downside risk into 2019.
Netflix announced an increase in the price of its services by 13-18%, its largest increase ever. The timing is interesting, as streaming media competition continues to heat up. The increase will be implemented for existing subscribers over a 3-month period.
According to CEO Reed Hastings, “Price is all relative to value. We’re continuing to increase the content offering and that is reflected in viewing around the world.” However, previous price increases have had mixed results, in one case bringing a large drop to the stock.
In looking at the market cycles for NFLX, we can see it is still in the rising phase of its current cycle. However our view is negative, as it made a lower high in the previous cycle. We believe the stock will fail in resistance $350-370. Our intermediate downside target is below $300.
For more from Slim, or to learn about cycle analysis, check out the askSlim Market Week show every Friday on our YouTube channel .
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