Netflix Chart Weakens After Earnings Drop

Earnings miss leaves shares facing a tougher technical setup

This article first appeared on GuruFocus. Netflix (NASDAQ:NFLX) shares dropped about 9% after earnings, and the chart now looks much shakier than it did before the report. The stock has fallen below its 50-day, 100-day and 200-day moving averages, which tells traders that momentum has weakened across nearly every time frame.

It also slipped just below $69, a level that had previously acted as support and is now becoming an important line in the sand. Netflix runs one of the world's largest streaming platforms, with revenue coming from subscriptions, advertising and newer bets such as live programming. That makes investor confidence especially sensitive to growth, engagement and guidance.

The technical picture is not entirely one-sided, though. Netflix's 10-day rate of change has fallen to around -13%, while the RSI is near 29, putting the stock close to oversold territory.