Netflix, Inc. (NASDAQ:NFLX) has crashed nearly 30% in the past three months and the last time it was trading this low was back in February of this year. Investors may be wondering if now is the time to buy the streaming giant as it may be due for a recovery.
Let’s take a closer look at its recent price movement to see whether it could be preparing for a rally, or if things could be about to get a whole lot worse.
Relative Strength Index (RSI) can tell us a lot about how a stock has been doing lately as it looks at the average gains and losses over the past 14 trading days and helps to gauge whether there’s been too much buying or selling lately. Currently, Netflix is at an RSI of 32, which is just above oversold territory (30). Only once this year did the stock dip below 30, and that was back in August when it closed at under $317. It did end up recovering and would climb to over $350 before eventually dropping back down.
Whether the stock can do that again is another story, as there’s another bearish trend that might have investors worried. Netflix’s stock recently made a “death cross” where its 50-day moving average dropped below its 200-day mark, the first time that has happened all year. It’s a very bearish sign that could have even more investors pushing the sell button.
Given the negativity surrounding the markets right now and a bearish indicator setting off investors, Netflix is a stock I’d avoid, at least for the time being. It still trades at around 100 times earnings and remains a very expensive buy.
Tech Insider
