Apple reports on Tuesday after the close (not Monday). I will do its earnings review with my Monday post.
NETFLIX
The fundamentals look good. I will give it a solid 8 out of 10. Also, it has beaten earnings 15 quarters in a row. That is as far back as I went, so it could be a lot more than a 15-quarter winning streak. But as the saying goes: past performance does not guarantee future results. Eventually it will disappointment. It is just a matter of time. But at this time, it looks good going into the report. I expect it to beat earnings as it always does. Revenue will likely exceed or come in line with expectation. But the most important aspect will be its guidance. Guidance will determine whether it gaps up or down after it reports. The revenue will not matter.
On the techical side, there are both bullish and bearish setups. See the charts in my weekend post.
So, though the fundamentals favor the upside, I will be looking to make a bullish (Call option) or bearish (Put option) play. This will depend on intraday action on Monday (see details below). Also see my targets on NFLX-DAILY chart.
While I believe NFLX will gap up after the report, I will post my plan 15minutes before the close on Monday. I need to see price action for the day before making an entry in the last 5mins of the day because that will be the deciding factor/confirmation.
If you are interested in taking this play, check back for my post 15-20minutes before the close on Monday, or follow these instructions (if they are not confusing). It is what I will use to make my decision:
Look for the trend from the 2nd to 12th candlesticks on the 30min chart. I did not include the 1st and 13th candlesticks because that is when there is too much noise (volatility) in the market (especially for a stock that is reporting earnings). So they don't paint the real picture of the day. If the trend is up for the day, then expect a positive reaction to earnings - bullish. If down, expect a negative reaction - bearish. If flat, then check whether it is an up or down day based on where it opened and where it is about 5mins before the market closes. It should NOT be based on previous day's close. So it can be down for the day based on Friday's close but up based on where it opened (and vice versa). I'm interested in the latter. Note that this puts the odds significantly in my favor but is no guarantee.
What if it is flat from the 2nd to 12th candlestick, and also flat for the day based on the open and 5mins before the close? It means you should stay away whether it is up or down for the day (due to an opening gap).
