Netflix: More Downside Potential Following Bearish Guidance?

Netflix, Inc. (#Netflix), an American subscription streaming service and production company, is set to report its Q2 2022 earnings on 19^th July (Tuesday), after market close. During the current unfavourable macro-economic environment, Netflix has been among the worst performing stocks on the S&P 500 index.

In general, inflation, supply chain disruptions, rising interest rates and the threat of recession shall continue to hurt tech stocks. Following Russia’s invasion of Ukraine, Netflix ceased its operation in Russia, resulting in the company shedding a net 700,000 accounts, its first quarterly loss of subscribers in a decade. This caused the Netflix share price to tank 35% and tens of billions of its market capitalization was wiped off in a single day. Other factors that served as headwinds to the company growth include increased competition, high household penetration and account sharing.

Fig 1：Number of Netflix Paid Subscribers Worldwide. ： Statista

The management has provided a disheartening guidance for the upcoming quarter, with expectations that paid memberships shall reduce by -2 million to 219.64 million.  According to Zacks Consensus Estimate, the figure is estimated to drop -1.7 million to 219.94 million, solely based on the company’s utilization of pricing power to offset subscriber losses. Besides the number of subscribers, other issues that concern the investors include the details of Netflix’s partnership with Microsoft in its ad-supported plan. A successful strategy could inevitably help to combat falling subscriber numbers, and vice versa.

Fig 2：Reported Sales and EPS versus Analyst Forecast for Netflix ：money.cnn

Estimations for reported sales in the upcoming earnings announcement stood at $8.0B, up +1.27% from the previous quarter and +9.59% from the same period last year. On the other hand, consensus estimates for earnings per share (EPS) stood at $2.96, down -16.15% (q/q) and -0.34% (y/y) respectively. Netflix has been ranked #4 (Sell) by Zacks.

Technical Overview:

In the bigger picture, all pandemic gains of #Netflix shares have been erased since the sell-off that started in mid November 2021, leaving an all-time high at $700.20. Currently, the company share price is traded slightly above the 52-week low ($162.48) and the low estimates of analysts ($150). These two levels serve as important support. $205 serves as a minor resistance zone to watch. The psychological level $250 and the lows seen in September 2019 ($252.22) serve as the next resistance zone, followed by the daily 100-SMA. Breaking above these resistance zones may indicate the bulls will continue the momentum towards the next resistance at $367.90 and $431.30.

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Larince Zhang

Market Analyst 

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

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USDJPY, H4 | Potential Bearish Continuation

Type: Bearish BreakoutKey Levels:Resistance: 139.383Pivot: 137.738Support: 136.728Preferred Case:On the H4, with price reversing off stochastic resistance, we have a bearish bias that price will drop to our pivot at 137.738 where the pullback support, 78.6% fibonacci projection and 23.6% fibonacci retracement. Once there is downside confirmation of price breaking pivot structure, we would expect bearish momentum to carry price to 1st support at 136.728 in line with overlap support and 38.2% fibonacci retracement.Alternative Scenario:Alternatively, price could rise to 1st resistance at 139.383 where the swing high resistance is.

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GC1!, H4 | Potential Bearish Continuation

Type: Bearish ReversalKey Levels:Resistance: 1784.2Intermediate Resistance: 1712.0Pivot: 1784.2Support: 1664.3Intermediate support: 1693.9Preferred Case:On the H4, with price moving below the ichimoku cloud and in a descending trendline, we have a bearish bias that price will drop if price breaks the intermediate support at 1693.9 at the swing low to the 1st support at 1664.3 in line with the 100% fibonacci projection .Alternative Scenario:Alternatively, if price breaks the intermediate pullback resistance at 1712.0, price may rise to the pivot at 1784.2 at the swing high in line with the 23.6% fibonacci retracement . If price breaks the pivot, we have upside confirmation that price will continue to rise to the 1st resistance at 1784.2 at the pullback resistance in line with the 50% fibonacci retracement.

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Investment Bank Outlook 18-07-2022

BofAEUR and USD 20-year reunionWe have been out-of-consensus USD bulls this year, but it now turns out we have not been bullish enough. EURUSD is back to parity after 20 years. USDJPY is at 139, the highest level since the East Asian financial crisis in the late 1990s. Cable at 1.18 has reached the lowest level since the early pandemic dip. The USD is by far the stronger G10 performer this year, with the JPY the weakest and EUR and GBP in the middle. The overheating US economy and the hawkish Fed have a lot to do with the strong USD. We have been expecting global inflation to be sticky on the way down, but it is still on the way up. US (and UK) headline and core inflation rates are the highest in G10. The US labor market remains very strong and very stretched. The Fed is downplaying recession risks and is focusing on fighting inflation. They were late to start hiking, based on the false belief last year that inflation was transitory, but they are now very determined. Most other G10 central banks have also turned hawkish.The BoC surprised this week with the first central banks in G10 this year to hike by 100bp. In any case, 50bp has already become the new normal. However, currencies fail to rally after the hikes, partly because of the upward USD trend and partly because of risk-off. However, beyond the USD, relative monetary policies remain a key FX driver—CAD is the second best performer in G10 this year, after the USD. The BoJ remains the only in G10 that committed to loose policies. We expect the BoJ to deliver a one-off rates adjustment in 2H CY22 (base case October), consisting of a hike to the short rate target (to 0.0-0.1%) and a shift in the YCC 10yr target permissible trading band to +0.0-0.5%. But we think it is too early for the BoJ to capitulate and see no change to YCC next week. In our view, they are right to remain dovish, as core inflation remains well below 2%, while headline inflation at 2.5% is the lowest in G10. Still, given how much JPY has weakened, some verbal intervention next week is likely. This may prevent further JPY weakness, but is not enough for a turn, in our view.As we have discussed in recent reports, the ECB stands out as the central bank with the lowest policy rate in G10 and the only one after the BoJ that has not hiked yet. We do expect them to start hiking next week, but by only 25bp, as Lagarde has repeatedly pre[1]announced. A 50bp hike would be more than justified in our view, given persistent inflation surprises, but unlikely and even counterproductive given recent communication. We have been arguing that the ECB is held back by periphery concerns. We may get some insights about how they will address fragmentation risks next week, but we believe it will take longer to come up with the new policy tool that the ECB has promised.Our economists expect a light OMT (Outright Monetary Transactions) before September, with existing conditions (fiscal and Next Generation EU commitments) enough to pre-qualify. This avoids the program stigma and should allow the ECB to accelerate hiking this fall, but we are concerned that such a “fudge,” in addition to increasing negative supply shocks, will not be enough to allow the ECB to be as hawkish as most other central banks.

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Daily Market Outlook, July 18, 2022

Daily Market Outlook, July 18, 2022 Overnight Headlines IMF To Cut Global Growth Outlook ‘Substantially’ At The Next Review G-20 Finance Chiefs Blame Russia As Path To Soft Landing Narrows Fed Preparing To Lift Interest Rates By Another 75 Basis Points: WSJ Biden Fails To Secure Major Security, Oil Commitments At Arab Summit Italian Right-Wing Parties Reject 5-Star Movement As Coalition Partner BoE’s Missed Inflation Aim Becomes Topic Of UK Leadership Debate Russia Vows To Ramp Up Military Operations As Rockets Pound Ukraine China Covid Cases Held Above 500 Yesterday; Shanghai In Testing Blitz New Zealand Inflation Outpaces Forecasts At A Fresh 32-Year High Oil Drops As China's Rising Covid Cases Renew Fuel Demand Concerns Asian Equity Markets Mostly Higher To Start The Week; Japan ClosedThe Day Ahead Following Friday’s gains across US and European exchanges, stocks have continued to rally across Asian markets. Equities across China have risen in response to PBoC Governor Yi’s comments that the central bank will step up monetary policy support to the economy, following the weaker-than-expected Q2 GDP report. China equities, however, lag the broad pick-up across Asia as elevated Covid cases continue to weigh on sentiment. The prospect of aggressive monetary policy tightening by the world’s major central banks continues to be a dominant feature for global financial markets. Last week, US annual consumer price inflation increased to a fresh forty-year high of 9.1%, a stronger outturn than predicted. That boosted speculation that the US Federal Reserve could follow the Bank of Canada’s example by lifting rates by a full percentage point despite signs of moderating economic activity. The Fed will provide a policy update on 27 July, ahead of which there a few bits of data in the coming week, primarily housing- market related, that should provide some food for thought. Later today, the National Association of Home Builders (NAHB) survey for July is expected to show a further softening in sentiment. The headline index is forecast to drop to a fresh two-year low of 66 from 67 previously, perhaps weighing against the FOMC hiking rates by 100bp at its meeting next week. In the UK, a similar debate continues to rage with sterling money markets speculating that the Bank of England come start delivering 50bp increases in Bank Rate at its upcoming meetings, starting with the one on the 4th August. This morning, MPC member Michael Saunders – who departs the committee shortly after the August meeting – is due to speak at an event hosted by the Resolution Foundation. He is likely to reaffirm his desire for a 50bp hike at his final meeting. Early tomorrow morning, the latest labour market report kicks off a busy week for key UK data releases, which could prove crucial in determining whether the MPC step up their rate increases from 25bp to 50bp. Despite the slight rise in the unemployment rate in last month’s release, the UK labour market remains tight with the focus on high inactivity rates among the working-age population and unfilled vacancies at a new peak. For the three months to May, expect the unemployment rate to stay at 3.8% and underlying annual pay growth (excluding bonuses) to edge up to 4.3% from 4.2%.CFTC Data IMM: USD spec long rises as EUR, JPY, GBP hit new trend lows versus dollar USD spec long position rose in Jul 6-12 period EUR slid 2.2% in period, spec -8,392 contracts now short 25,244 JPY specs -5,553 contracts now short 59,998; $JPY +0.7% in period GBP$ -0.63% in period, specs -2,881 contracts now short 59,089 Specs +6,021 AUD on RBA rate hike, CAD specs -788 ahead of BoC BTC specs -591 contracts, flip to short 171; BTC - 4.9% in period (Source:Reuters)FX Options Expiring 10am New York Cut EUR/USD: 0.9975 (452M), 1.0000 (1.12B), 1.0100 (583M), 1.0175 (753M)Technical & Trade ViewsEURUSD Bias: Bearish below 1.0350 EUR/USD up 0.15% in Asia as it continues to recover on better risk sentiment Waning fears of jumbo July Fed hike, easing US inflation expectations boost Lifted by S&P E-Mini rally of 0.4% as Fri risk recovery spills over to Asia Asia range 1.0080-1.01145 as traders pare euro shorts ahead of risk events ECB meeting, planned reopening of Nord Stream 1 gas pipeline Thursday eyed Resistance 1.0170-75, support 1.0075-80, 1.0045-50 20 Day VWAP is bearish, 5 Day bearishGBPUSD Bias: Bearish below 1.2150 GBP/USD clings to gains driven by broadly weaker USD Last at 1.1901 from Fri close 1.1870; holding strong But bulls need a harder push to steer out of technical rut Mon close above 1.1905 negates Bollinger downtrend channel That would clear the way for challenge of 1.2000 psych barrier UK property asking prices +9.3% y/y vs +9.7% in June 20 Day VWAP is bearish, 5 Day bearishUSDJPY Bias: Bullish above 134 USD/JPY bounces to 138.37 from 138.03; still below open 138.47 VWAP uptrend channel intact; base at 137.59 Softer USD all around with risk-on picked up from Wall St But outlook hasn't changed much for USD/JPY bulls FOMC ahead the main focus, though 100bps hike less likely Japan financial markets closed Monday; S&P futures +0.4% 20 Day VWAP is bullish, 5 Day bullishAUDUSD Bias: Bearish below .7050 AUD/USD rallies 0.35% as Wall Street's risk recovery spills over to Asia Cooling Fed rate bets, easing US inflation expectations boost risk mood Last week's lowest AU jobless rate since 1974 sparks bigger RBA hikes talk NAB, Goldman Sachs, Nomura and TD Securities expect 75bps RBA hike in Aug Rising COVID cases in China, slowing China economy likely to limit gains Asia range 0.6792-0.6818; resistance 0.6830, 0.6850, support 0.6790, 0.6750 20 Day VWAP test underway 20 Day VWAP is bearish, 5 Day bearishBTCUSD Bias: Bearish below 22k BTC recovers 22K Testing trend channel resistance, bargain hunting scene in nascent rally BTC bulls take solace from FED tempering hawkishness Support seen at 19k then 18300 the base of the daily VWAP bands failure here opens a retest of lows Concerns regarding increasing Crypto player forced liquidations leave BTC vulnerable Additional pressure seen from BTC miners liquidating positions on declining profitability 20 Day VWAP is bullish, 5 Day bearish

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Market Update – July 18 – Stocks Rally, Dollar Dips, Biden Fist Bump

USDIndex continued last week’s slip to test 107.60. US data on Friday (Retail Sales, Empire State & UoM Con. Sentiment) all better than expected. Bullard talked 75bp not 100bp for July.  US Stocks rallied into close (DOW +2.15%), despite misses from Wells Fargo & Blackrock. Asian markets positive, (Hang Seng +2.42%, Nikkei +0.43%). European FUTS positive too. Yields closed down -1.25% but the rate curve is still inverted. Oil up to $98, Gold up to $1714 BTC has rallied to $22k. Biden, fist bumped Crown Prince Mohammed bin Salman but got little from visit, Yellen pushes minimum global corporation tax, IMF are “exceptionally uncertain” over global growth & Reuters report on 12 countries on brink of default.

Week Ahead – ECB & BOJ Rate Decisions, RBA Mins, a raft of CPI & Retail Sales data and Earnings Season gets into full swing including Banks & IBM today, Netflix, Tesla, Twitter and Johnson & Johnson later in the week.

• USDIndex slides further from Thursdays 109.00 to 107.60 now as expectations of a 100bp rate hike next week recedes.   
• Equities – USA500 closed +1.92% 72.54pts (3863), US500FUTS at 3897 now. Wells Fargo profits fell 50% but stock closed +6.2%, United Health +5.4%, Blackrock +2%, Netflix +8.2%, BAC +7.04%. 35 companies have reported; 80% have beat estimates.
• Yields 10-year yield higher, from close +2.92%, trades at 2.935% now. 
• Oil & Gold had volatile sessions last week – USOil trades up back to $100 from $90.90 lows last week, following inconclusive Biden visit to Mid-East; OPEC next meet Aug 3. Gold fell under $1700, last week but back to $1714 now on weaker USD. 
• Bitcoin rallied from $19K, testing $22.2K today on more chatter of major investments coming.
• FX Markets – EURUSD remains pressured at 1.0100, USDJPY down from 139.30 to  138.20 now. Cable trades back to 1.1900 from 1.1760 lows last week. Race to be new PM is reduced to two contenders this week. New PM Sept 5. 

Overnight – NZ CPI hotter than expected (1.7% (32-year high) vs. 1.5%). NZD jumped too.

Today – Little economic data a speech BoE’s Saunders and Earnings – Bank of America, IBM, Goldman Sachs & Charles Schwab.

Biggest FX Mover @ (06:30 GMT) GBPJPY (-0.39%). JPY safe haven bid following ABE shooting stemmed the rally to 164.00 from 160.40 on Wednesday. Down to 162.80 now.    MAs crossed lower, MACD histogram positive but falling, RSI 44 & falling, H1 ATR 0.319, Daily ATR 1.983.

Click here to access our Economic Calendar

Stuart Cowell

Head Market Analyst

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

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​​​​​​​Which stockmarkets look cheap now?

We’re always telling you to buy when assets are cheap. So are any global markets looking appealing yet?

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A fund to provide a reliable income from biotech

The BioPharma Credit investment trust lends to promising small drug developers.

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Three companies to buy that will conquer the competition

Professional investor James Harries of the Securities Trust of Scotland picks three long-term investments that should sustain high returns on capital employed.

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I love its cars, but I wouldn’t touch Aston Martin’s shares

Aston Martin makes beautiful cars. But it has a chequered history and continues to lurch from disaster to disaster. That’s why I wouldn’t buy Aston Martin shares, says Rupert Hargreaves.

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Micro Crude Oil Futures (MCL1!), H4 Potential For Bearish Drop

Type: Bearish MomentumKey Levels:Resistance: 98.38Pivot: 95.18Support: 90.69Preferred Case:On the H4, with price moving below the ichimoku cloud and within the descending channel , we have a bearish bias that price will drop to the pivot at 95.18 where the overlap support is. Once there is downside confirmation of price breaking pivot structure, we would expect bearish momentum to carry price to 1st support at 90.69 in line with swing low support and 78.6% fibonacci projection .Alternative Scenario:Alternatively, price may rise to the 1st resistance at 98.38 where the pullback resistance, 78.6% fibonacci projection and 50% fibonacci retracement are.Fundamentals:Due to the uncertainty over the German gas crisis and supply constraint of oil , we have a bullish bias on oil . We'll need to exercise caution for this setup because our fundamentals and technicals are not completely aligned.

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Natural Gas Futures ( NG1! ), H4 Potential For Bullish Rise

Type: Bullish RiseKey Levels:Resistance: 8.028Pivot: 6.844Support: 6.060Preferred Case:On the H4, with prices moving above the ichimoku cloud and in an ascending trend channel, we have a bullish bias that price will rise from the pivot at 6.844 in line with the overlap support, 100% fibonacci projection and 38.2% fibonacci retracement to the 1st resistance at 8.028 where the pullback resistance and 61.8% fibonacci retracement are.Alternative Scenario:Alternatively, price may reverse off the pivot and drop to the 1st support level at 6.060 in line with the pullback support and 100% fibonacci projection .Fundamentals:Due to the proposed strikes in Norway, there are increased fears about inadequate supply, giving us a bullish bias on the price of natural gas .

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CANADIAN DOLLAR FUTURES (6C1!), H4 Potential For Bearish Drop

Type: Bearish MomentumKey Levels:Resistance: 0.77305Pivot: 0.76450Support: 0.75615Preferred Case:On the H4, with price moving below the ichimoku cloud and within the descending channel , we have a bearish bias that price will rise and drop from the pivot at 0.76450 where the overlap resistance, 50% fibonacci retracement and 100% fibonacci projection are to the 1st support at 0.75615 in line with the swing low support.Alternative Scenario:Alternatively, price may break pivot structure and rise to the 1st resistance at 0.77305 where the swing high resistance is.Fundamentals:As a result of the BoC rate increase of 100bps recently, we have a bullish bias on the Canadian Dollar . We'll need to exercise caution for this setup because our fundamentals and technicals are not completely aligned

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DAX FUTURES (FDAX1!), H4 Potential For Bullish Rise

Type: Bullish RiseKey Levels:Resistance: 13373Pivot: 12616Support: 12383Preferred Case:On the H4, with price moving in an ascending trendline on the RSI and price recently breaking the descending trendline, we have a bullish bias that price will rise from the pivot at 12616 at the pullback support at the swing low in line with the 78.6% fibonacci projection to the 1st resistance at 13373 at the overlap resistance in line with the 61.8% fibonacci projection and 23.6% fibonacci retracement.Alternative Scenario:Alternatively, price may reverse off the pivot and drop to the 1st support at the swing low at 12383 in line with the 61.8% fibonacci projection.Fundamentals:No Major News

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