Netflix: Where To Expect Bottom Now?

Last week, see here, I found that Netflix (NASDAQ:NFLX) had bottomed in the initial ideal target zone of $330+/-30 and had done so with five waves down from the all-time high made in November last year.

I was looking for:

“A breakout above the late March highs (~$390) would be an excellent sign the larger dead cat bounce is underway to ideally around $470-560.”

Instead, NFLX didn’t rally, as the reaction to disappointing earnings broke its share price below the recent March lows instead. Indeed as I also warned:

“in bear markets, downside surprises and upside disappoints.” Why? Because selling pressure dominates.”

Thus albeit all ingredients were in place for a low -the condition- my preferred view for a bounce was wrong. I apologize, but it happens, or as I always say:

”Please remember, my work is ~70% reliable and ~95% accurate. I am not a prophet. Thus, be realistic and do not expect perfection and zero bad calls in a dynamic, stochastic, probabilistic environment.”

So what happened instead?

Well, NFLX’s share price decided to subdivide lower, and the March low was turned from a potential Major wave-5 of Primary wave-A of Cycle-2 into an intermediate-i of major-5 setup instead. Hence, why I wanted to see that breakout to confirm wave-A was indeed complete.

The question now is: what’s next? Where should we expect a bottom now?

Figure 1: NETFLIX (NFLX) daily candlestick chart with detailed EWP count and technical indicators.

Netflix Daily Chart

Figure 1A shows the daily chart and how I anticipate NFLX to move over the next several days/weeks from an ideal Fibonacci-based Elliott Wave Principle impulse pattern.

Wave-iii of 5 of A should complete soon as it has already reached the perfect target zone. Then a bounce to the red, intermediate, wave-iv target zone ($297-267), followed by the last decline, ideally to $168-139, for wave-v of 5 of A.

Figure 1B shows how the final target zone aligns well with the 76.40% (!) retrace of the entire rally from NFLX’s IPO 20 years ago (May 23, 2002). Thus, as its share price did not stall in the initial target zone (red box), it will now seek out the next lower Fib-retrace zone. When the smaller waves complete blue Primary wave-A, I will then, once again, start looking for a more significant bounce to ideally around $490-370.

Bottom Line

I anticipate a short-term bounce soon for wave-iv of 5 of A to ideally $297-267, a final drop for wave-v of 5 of A to ideally $168-139, and then a multi-month bounce back to preferably $370-490 before the next more significant C-wave kicks in to complete all of Cycle wave-2 in the double to single digits.