Netflix Kicks Of FAANG Earnings: Could Disney Move In Sympathy?

With the S&P 500 and the Nasdaq at all-time highs, earnings results from the largest tech companies may help to push the general markets into blue skies or throw them into a period of consolidation.

Netflix Inc NFLX will report first-quarter earnings after the bell Tuesday, and while Walt Disney Company, The DIS won’t report until May 13, both stocks could react to Netflix’s results due to both companies offering popular streaming services.

The Netflix Chart: On April 1, Netflix’s chart broke bullish from a descending channel in which it had been trading since it gapped up on earnings to a new all-time high Jan. 20.

When the stock broke up out of the channel, the eight-day exponential moving average crossed above the 21-day EMA, which is a bullish indicator.

Since then, Netflix’s stock has been trading in sideways consolidation just under a resistance of $557.39. With earnings results incoming, traders will want to watch the stock’s price action Monday into Tuesday to guage the sentiment.

Positive sentiment may push the stock over resistance before earnings, while negative sentiment or indecision may keep the stock under resistance until the report is released.

Netflix stock has had big reactions to earnings in the last two quarters, with a gap down after third-quarter in 2020 and a large gap up after fourth-quarter earnings in January.

Bulls want to see Netflix stock break above the overhead resistance to make a run back toward all-time highs. If this occurs, a positive earnings reaction could push Netflix into a blue sky run.

Bears want to see Netflix continue to trade under the overhead resistance and for a negative reaction to earnings. If Netflix is unable to break up above resistance, it could fall to $531.73 and if it can’t hold support there, it has room to move down to the $510 area.

Related Link: Netflix Earnings: Analysts Eyeing The Subscriber Base Growth And Possible 'Pull-Forward'

The Walt Disney Chart: Walt Disney’s stock has been trading in a symmetrical triangle since it reached an all-time high of $203.02 on March 8.

The stock has also been rangebound for the last 18 trading sessions, unable to break above $191.50 and unable to break below $183.40.

Walt Disney’s daily trading range has been tightening over the last few weeks, which could indicate a break is imminent.

Walt Disney’s stock is pinned between the eight-day EMA and the 21-day EMA, which shows indecision.

Bulls want to see large bull volume come into the stock to help it break up over $191.25, which would give Walt Disney’s stock room to make a run back to all-time highs.

Bears want to see large bear volume come into the stock to break it down below $183.40, which could drive the stock down to its next support level at $171.89.

If Walt Disney’s stock fell to that level, both bears and bulls may want to see the stock drop down to at least fill the higher gap near the $160 level before reversing.

NFLX, DIS Price Action: Netflix shares were up 0.46% at $549.06 at last check Monday. Disney shares were down 0.45% at $186.35.