Netflix, Inc. (NASDAQ:NFLX) is again looking bullish on the charts, says a report from WSJ by Tomi Kilgore. The share of the streaming firm increased 7.1 percent to $229.23 on Monday. The stock jumped after it declared a multi-year content deal with Dreamworks Animation Skg Inc (NASDAQ:DWA). The stock price breached the downtrend, which started after the stock hit a two year high of $248.85 on May 16.
Netflix, Inc. (NFLX) Agreement with DreamWorks
As per the agreement between both the companies, 300 hours of new programs will be covered. The shows that have drawn inspiration from the Dreamworks Animation Skg Inc (NASDAQ:DWA) franchises will also be included. There will be new feature films and the classic media library in the program. The characters like Casper the Friendly Ghost, Lassie, She-Ra and Mr. Magoo are in the classic media.
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The first series will be started in 2014 and will be available in every region where Netflix, Inc. (NASDAQ:NFLX) operates.
Why Netflix Looks Bullish?
“The uptrend has reasserted itself,” said Stanley Dash, vice president, applied technical analysis at Trade Station Securities. “To follow through, [the stock] has to make a new high at this point.”
If the stock hits over $248.85, the next target that could be achieved will be the high of 2011 at $304.79.
The bullishness in the stock is supported by the fact that the trendline is rising from mid January and is at present around $207.50. The trendline was observed last week, and the increase yesterday reflects that it has surpassed the support. Netflix, Inc. (NASDAQ:NFLX) stock has reached and surpassed the 50 day moving average, which indicates that the stock will be in uptrend in the near term.
According to Dash, the technical changes on the long term weekly charts should be examined carefully and if the trend continues then it can indicate that the uptrend is not for long.
Towards the end of April, the stock surpassed its one and half year high. The Relative Strength Indicator through which the extent of gain in comparison to losses is measured came down from a multi-year high that was made in February.
Dash said that investors should take a close look and must be careful because though the price is increasing, momentum is stable. He said that the bullish investors should not be worried if the stock makes new highs because this type of technical “divergence” can continue for long term.
If the Netflix, Inc. (NASDAQ:NFLX) stock starts declining before hitting the high made in May then this will raise some concerns.
At present, the stock is in favor of the bulls.