Technical analysis

Two stocks to watch: week 3, 2024

By Antreas Themistokleous

17 January 2024

3100 rapid post nflx msft

As week 3 progresses, two huge tech companies are already showing opportunities for stock traders. Let’s take a deep dive into Microsoft Corporation and Netflix, Inc.

Microsoft Corporation (MSFT)

Microsoft Corporation saw its share price experience some gains in the last quarter of the year, with the majority of the bullish rally happening in November. The company’s earnings report for the fiscal quarter ending December 2023 is expected to be released on Tuesday, January 23rd. The consensus EPS is $2.75 (USD), compared to $2.32 for the same quarter last year.

As of Friday, January 12, Microsoft surpassed Apple as the world’s most valuable company by market cap, valued at $2.89 trillion versus Apple’s $2.88 trillion. Microsoft’s stock has been boosted by the optimism of a $10 billion investment in OpenAI. Meanwhile, Apple has struggled amid legal troubles, slowing demand for electronics, and more.

Microsoft also displays a solid financial image, as one would expect from the tech giant. As of September 30, 2023, the total assets grew by around 24% year over year, while the current ratio is at around 166%, showing the company’s ability to overcome any short-term turmoil.

Technical analysis shows that the price has been testing the resistance of the upper band of the Bollinger Bands for the last four sessions but has yet to correct to the downside. This indicates that volatility in the market for Microsoft shares is heightened. Adding to the bullish narrative, we also see the 50-day moving average trading well above the 100-day moving average, validating the bullish trend. On the other hand, the Stochastic Oscillator is recording extreme overbought levels, possibly hinting that a correction might be seen in the coming sessions.

Netflix, Inc. (NFLX)

Shares of Netflix, Inc. experienced exponential growth in the last quarter of the year, rising by around 30%. The company’s earnings report for the fiscal quarter ending December 2023 is expected to be released on Tuesday, January 23rd, after market close. The consensus EPS is $2.20, compared to $0.12 for the same quarter last year.

The company’s net income increased by around 20% year over year and had steady growth in all the consecutive quarters of 2023. As of September 30, 2023, the total assets outweigh total liabilities at a ratio of almost 2:1. The company’s debt slightly increased by 0.09% year over year but still makes up almost half of the total liabilities. Netflix also has a decent current ratio, standing at 129%, meaning it has the ability to repay its short-term liabilities with its current assets in possession.

From a technical analysis perspective, the price has been trading with relatively steady bullish momentum throughout the majority of the quarter, making consistent gains on its shares. Currently, the price is testing the resistance of the 61.8% Fibonacci retracement level on the weekly chart and seems to be correcting at the time of this report, while facing the inside support area that the price rejected in mid-December.

If this is temporary and the price continues its upward momentum, then the area of $500 might be the next possible resistance level, as it is both the psychological resistance of the round number and the previous high that currently also acts as resistance.


This is not investment advice. Past performance is not an indication of future results. Your capital is at risk, please trade responsibly.


Author:

Antreas Themistokleous
Antreas Themistokleous

Antreas Themistokleous is a trading specialist in Exness. He is a Certified Financial Technician since 2018. As a member of the Society of Technical Analysts, Antreas is implementing advanced use of indicators and patterns to conclude in an action plan for different trading strategies.