by Pinchas Cohen
Netflix (NASDAQ:NFLX) reports Q3 2017 earnings today after the market close. Consensus forecasts EPS of $0.32 vs a $0.12 EPS YoY, which would indicate 266 percent expected growth. Goldman Sachs has reaffirmed its buy rating on the stock, and has raised its price target to $235 from $200, predicting better-than-expected subscriber growth in Q3.
In July, the stock price gapped up 8.75 percent, most of which was filled during late August, retesting the gap’s bottom support, which held.
The return-move was also part of a larger dynamic, forming a continuing triangle. The bullish pattern was completed with an upside breakout on October 5. The pattern height suggests the next rally will take the price up $26 to $215.
The breakout was part of a sharp move, a $22.46, 12.5 percent upleg in just 5 sessions. The consolidation in the following 4 sessions and Friday’s record close, just a hair under $200, suggest a breakout of a continuing pennant formation, in support of the previous continuing triangle.
Trading Strategies
Conservative traders may wait with a long position for a potential return-move to the triangle, after a more than 5-percent breakout filtered out the possibility of a bull trap.
Moderate traders may filter out the reliable, smaller pennant pattern, not waiting for a return-move to the larger, triangle pattern, before going long.
Aggressive traders may go long now.
Editor's Note: For an alternative view on Netflix, see this post, published earlier today.