{"id":39792,"date":"2023-07-24T10:46:45","date_gmt":"2023-07-24T14:46:45","guid":{"rendered":"https:\/\/ifintechworld.com\/investing\/correction-in-tesla-netflix-shares-could-last-several-weeks-stock-charts-warn\/"},"modified":"2023-07-24T10:46:49","modified_gmt":"2023-07-24T14:46:49","slug":"correction-in-tesla-netflix-shares-could-last-several-weeks-stock-charts-warn","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=39792","title":{"rendered":"Correction in Tesla, Netflix shares could last several weeks, stock charts warn"},"content":{"rendered":"
\n

Shares of both Tesla Inc. and Netflix Inc. fell into correction territory Friday, and their charts suggest the selloffs are likely to continue for as long as several weeks.<\/p>\n

Tesla\u2019s
\n TSLA,
\n -0.03%<\/bg-quote>
\n stock fell 1.1% to close Friday at $260.02, which was 11.4% below the 10-month closing high of $293.34 on July 18. Read more about Tesla earnings.<\/p>\n

\n

Meanwhile, Netflix
\n NFLX,
\n -0.88%<\/bg-quote>
\n shares shed 2.3% to $427.50 on Friday, or 10.5% below the 18-month closing high of $477.59 on July 19. Read about how Netflix earnings disappointed.<\/p>\n

Many on Wall Street call a decline of up to 10% from a significant peak a pullback, while a selloff of 10% to 20% is defined as a correction. Falling 20% or more would make it a bear market.<\/p>\n

Investors behaved like they were stunned by the two companies\u2019 late-Wednesday earnings reports, as evidenced by the downside gaps in the stocks\u2019 charts on Thursday. A gap decline refers to when a stock\u2019s open is below the previous session\u2019s close.<\/p>\n

On Thursday, Tesla\u2019s stock opened at $279.56, below Wednesday\u2019s close of $291.26.<\/p>\n

<\/p>\n
<\/p>\n
<\/div>\n<\/figure><\/div>\n

Netflix shares created a gap between Thursday\u2019s open of $447.00 and Wednesday\u2019s close of $477.59.<\/p>\n

<\/p>\n
<\/p>\n
\n \"\"\n <\/div>\n<\/figure><\/div>\n

The downside gaps in the stocks \u2014 at a time when their 20-day moving averages, which are used to track shorter-term trends, were flattening out \u2014 are \u201csigns of upside exhaustion,\u201d said Katie Stockton, technical analyst and founder of Fairlead Strategies LLC.<\/p>\n

\u201cIn this environment, we feel that is enough of an indication to reduce exposure temporarily, noting that our indicators now support several weeks of corrective action for both stocks,\u201d Stockton wrote in a note to clients.<\/p>\n

Another sign of technical exhaustion is that while the stocks were trending higher in the past month to reach fresh peaks, the relative strength indexes (RSIs) of both stocks had already peaked at overbought levels in mid-June and have been trending lower since.<\/p>\n

<\/p>\n
<\/p>\n
\n \"\"\n <\/div>\n<\/figure><\/div>\n

The RSI is a momentum indicator that tracks the magnitude of recent gains against the magnitude of recent losses. When the RSI rises above the 70 level, it\u2019s believed to depict an \u201coverbought\u201d condition, meaning that historically, rallies of that magnitude have tended to tire out the bulls.<\/p>\n

<\/p>\n
<\/p>\n
\n \"\"\n <\/div>\n<\/figure><\/div>\n

Overbought conditions aren\u2019t necessarily good market-timing signals, since they can persist for relatively long periods of time. But when the RSI trends in the opposite direction of price, a technical condition referred to as \u201cbearish divergence,\u201d the RSI direction is often the correct one.<\/p>\n

Read<\/strong>: Nvidia\u2019s stock is the most overbought in 18 months, but that doesn\u2019t mean the rally is over<\/p>\n

If Tesla\u2019s stock does continue its descent, Stockton said initial support is around the $243 level. For Netflix shares, initial support is around $406.<\/p>\n

Other downside levels to watch for in Tesla\u2019s stock is where the widely followed 50-day moving average comes in, currently at $235.31, followed by the early-June breakout level defined by the February peak around $215.<\/p>\n

For Netflix, the late-May breakout level defined by the late-January\/early-February peak in the $270 area could provide support.<\/p>\n

Tesla\u2019s stock has run up 57.5% over the past three months and Netflix\u2019s stock has jumped 30.3%, while the S&P 500
\n SPX,
\n +0.38%<\/bg-quote>
\n has advanced 9.8%.<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Shares of both Tesla Inc. and Netflix Inc. fell into correction territory Friday, and their charts suggest the selloffs are likely to continue for as long as several weeks. Tesla\u2019s TSLA, -0.03% stock fell 1.1% to close Friday at $260.02, which was 11.4% below the 10-month closing high of $293.34 on July 18. Read more […]<\/p>\n","protected":false},"author":1,"featured_media":39793,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"video","meta":{"footnotes":""},"categories":[239],"tags":[83],"class_list":["post-39792","post","type-post","status-publish","format-video","has-post-thumbnail","hentry","category-investing","tag-featured","post_format-post-format-video"],"yoast_head":"\nCorrection in Tesla, Netflix shares could last several weeks, stock charts warn | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Shares of both Tesla Inc. and Netflix Inc. fell into correction territory Friday, and their charts suggest the selloffs are likely to continue for as long\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/ifintechworld.com\/?p=39792\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" 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