For each buy idea, you’ll see:
1-the pattern in blue
2-target
3-the suggested stop in red
For each short idea, you’ll see:
1-the pattern in red
2-target
3-the suggested stop in blue
Buys
Bullish Pattern Breakouts
AZO
Buy the dip in an uptrend
DRI
Severely oversold & near support
Shorts
Bearish Pattern Breakdowns
Short the rip in a downtrend
Overextended to the upside
Earnings
NFLX
Bullish Pattern Breakouts
We last profiled AZO back on 5/24 when it was severely oversold, near support and testing its 200-day moving average. (The stock’s 40-week moving average is pictured on the below chart, which lines up with the 200-DMA.)
Little did we know back then, but the ensuing bounce actually was the beginning stages of forming what’s now become a potential 10-month cup/handle pattern. AZO last broke out of a similar pattern in February’24. If it can once again break through its most recent highs, the upside target would be at 3,730.
AZO reports earnings on 12/3/24.
RNA has had a monster run, starting last December under the 10-level and rallying all the way to the high 40s. However, its huge advance has stalled over the last few months. Right now, it’s net flat since mid-July. Like just about every other stock, it continues to edge higher from its August low point. RNA now has formed a potential cup and handle pattern. If the stock can punch through the 49-zone, momentum could find its way back into the name. The measured move would target 59.
RNA reports earnings on 11/13/24.
Earnings
We last recommended NFLX on 9/17, as it was close to completing the inverse H&S pattern. While the stock got through the noted breakout point, real upside follow through has been lacking the last few weeks. The early reaction to last night’s earnings has the stock trading near all-time highs. Thus, the upside target of 810 still is in play.
Going forward, we’ll need to watch how the stock does vis-à-vis the apparent opening upside gap. It’s had noticeable gaps post earnings in three of the last four quarters – Two up and one down. NFLX respected the upside gaps from last October and January, with the stock trending higher over the ensuing three months.
Conversely, it filled the downside April gap within a few weeks and rallied through mid-July. Thus, the next two weeks of action will prove important once again, with NFLX trying to hold above and, potentially, extend from today’s gap.
Bigger picture, the question that will need to be answered for NFLX and hundreds of stocks over the next few weeks is this:
How will the market view the current technical state?
1-Too extended from its August low to reward a solid earnings report.
Or…
2-Net flat since the last earning cycle, with a budding bullish pattern breakout ready to be leveraged.
While the MAG 7 has replaced FAANG (of which NFLX was a member), as the market’s favorite acronym, NFLX always is highly watched given that it’s the first large cap growth company to report numbers. Like many other growth names, it has come back from the August depths, but it hasn’t extended too much beyond its highs.
NFLX is a member of the XLC Communication Services group, of which is has a 6% weight. That’s the third biggest among the 32 holdings, but it’s much smaller than META (20%) and the two classes of Alphabet – GOOGL and GOOG, which have a combined weight of 19%.
However, it has matched XLC’s track over the last three years. It held on longer than XLC in 2021/22 before rolling over. And it made a key low a full three months BEFORE XLC and the general market in 2022. Thus, we should watch it closely, whether we have a position in it or not.
