We’re heading into earnings season for the tech stocks…and it’s coming at a time that the sector stands at a key technical juncture. IBM reported better-than-expected numbers last night and it is trading 3% higher in the pre-market. However, IBM hasn’t been the bell-whether tech stock in decades. (Besides, it’s still almost 40% below its 2013 highs…and its high for the year had come during the first half…in 7 out of the past 8 years…so any near-term pop in the stock may have a tough time holding-up.)
However, we do get a more important name tonight…and this one comes from one of the FAANG stocks. NFLX reports tonight…and how it reacts to these numbers will be very important for the stock…and it could be quite important for the big-cap tech names overall. As we all know (with the exception of GOOGL), the FAANG names have been dead money since late last summer…but several of them are starting to show signs that they could finally regain some upside momentum. NFLX is one of those names…as it is testing the top end of the sideways range it has been in since July. Therefore, if tonight’s earnings report can be a catalyst for a sustained breakout of that range, it’s going to be very bullish for NFLX on a technical basis.
(We used the phrase “sustained breakout” in the last sentence because NFLX did breakout of its sideways range for a couple of days back in January. In fact, it was its earnings report that was the catalyst for that breakout. HOWEVER, the stock fell back into its range within two days…thus that quick breakout turned out to be a serious “head fake.” We obviously want to guard against that kind of move once again this time around.)
However, if it can indeed ...