S&P 500 AND NETFLIX OUTLOOK:

• The S&P 500 and Nasdaq 100 rally at the start of the week after Friday’s big sell-off
• Positive quarterly reports from various banks bolster sentiment on Wall Street
• Netflix’s earnings on Tuesday could be a key catalyst for the tech sector. What should traders expect?

Most read: S&P 500, Nasdaq and Dow Jones Price Action Setups and Technical Outlook

After a sharp sell-off last Friday, US equities staged a remarkable rebound at the start of the new week as strong earnings at several key financial institutions helped offset extreme pessimism over the challenging economic landscape. Meanwhile, news that the UK government would roll back deficit-financed fiscal stimulus, which would have created a huge hole in the budget and thrown markets into turmoil, also appeared to bolster risk appetite. .

Ultimately, the S&P 500 jumped 2.65% to 3,678, with consumer discretionary leading gains on Wall Street, followed by the real estate and communications sectors. Meanwhile, the Nasdaq 100 climbed 3.46% to 11,062, supported by a strong rally in shares of Microsoft, Alphabet, Amazon, Tesla and Meta Platforms.

Looking ahead, equities maintain a bearish bias amid deepening recession and tightening financial conditions, despite Monday’s heartbreaking advance, but low liquidity and light positioning should continue to amplify volatility in the sector. actions. In the current environment, any market-related security could trigger outsized directional moves that would normally appear erratic.

As for near-term catalysts, the economic calendar lacks major data releases on Tuesday, but there is one event retailers should keep an eye on: Netflix earnings announcement after the closing bell.

Although Netflix (NFLX) is no longer among the 10 largest US companies by market capitalization, it still has a significant weighting in both the S&P 500 and the Nasdaq 100, suggesting that its business performance may influence two clues, but perhaps more importantly, set the tone for tech companies.

In terms of expectations, analysts forecast Q3 EPS of $2.11 on revenue of $7.84 billion and net addition of 1 million users, but more attention should be given to forecasts; after all, investors are looking to the future. That said, traders should focus on the subscriber insightsas well as comments on Paid sharing initiative and the launch of the cheaper level of service with advertisements.

Ad adoption could be a boon to Netflix revenue, offsetting slower user growth in the increasingly competitive streaming business, so any bullish projections from management could boost sentiment, triggering a sharp rise in NFLX shares.

Source: Earnings Whistler

Focusing on Netflix’s key technical levels on the daily chart, initial resistance appears around the psychological mark of $250.00. If the bulls manage to push price above this barrier successfully, the focus shifts to $290, the 23.2% Fibonacci retracement of the November 2021/May 2022 selloff. Aside, if earnings trigger a bearish reaction, the first key support to consider is around $215.00. If this floor is breached, we could see a move towards $190.00.

NETFLIX TECHNICAL CHART (NFLX)

Netflix chart prepared using TradingView

EDUCATION TOOLS FOR MERCHANTS

• Are you just getting started? Download the beginner’s guide for FX traders
• Want to know more about your trading personality? Take the DailyFX quiz and find out
• IG’s customer positioning data provides valuable insight into market sentiment. Get your free guide on how to use this powerful trading indicator here.

—Written by Diego Colman, Market Strategist for DailyFX