EarningsBeats.com Digest for January 3, 2022
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Planning Ahead for a Potentially Profitable Trade
Last night, I finished our EB Monthly Seasonality Report for January 2022 and it reminded me that you can begin to anticipate better trading opportunities by combining technical conditions and historical trading patterns. Let's consider Netflix (NFLX) as an example. NFLX printed a negative divergence in mid-November as its PPO turned lower on
its price move through 700. It has since dropped 100 points and its PPO is now well below zero. If it moves lower one more time and closes beneath the mid-December low, NFLX will likely print a positive divergence. The reason this is significant is based upon NFLX's seasonal trading history. Check out the strength that NFLX typically sees from January through March:
Do yourself a favor and go back and check out the performance of NFLX every year from January 1st through March 31st. In two different years, we saw NFLX double its share price over those 90 days. In a few others, NFLX gained 50% or more. There have only been a couple years where NFLX actually fell more than 10-15% during this period. So if we see NFLX fall back to a new recent price low and a positive divergence forms, just keep in mind
the history of NFLX performance. It would seem that the odds would favor a long position.
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Tom Bowley
Chief Market Strategist
EarningsBeats.com
Better Timing. Better Trades.
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