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Momentum is back and Stocks are Rallying

David Becker
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Momentum is back and Stocks are Rallying

Momentum stocks have moved back into the forefront and Mondays better than expected earnings results from Netflix (NASDAQ:NFLX) is bound to generate a stir. Shares of Facebook (NASDAQ:FB) have surged back, and are poised to test higher levels. Economic data continues to show a moderate recovery, as yields continue to remain very accommodative making stocks a robust alternative.

Netflix’s first quarter profit jumped to $53 million from $3 million a year earlier as Earnings Per Share of $0.86 met analyst forecasts and revenue climbed 24.5% to $1.27 billion. Netflix (NFLX) added 2.25 million U.S. streaming subscribers, which was in line with the company’s guidance, and now has 35.67 million. The company also has 12.68 million international members after signing up 1.75 million.

Netflix plans to raise prices by $1-2 dollars a month for new customers, but will maintain current prices for existing subscribers. The stock price was higher prior to the opening bell in the US, surging as much as 8% in the pre-market session. Momentums on the shares are positive and the technical outlook continues to look strong.

In economic data that is scheduled to be released during the coming week, durable goods orders, jobless claims and new homes sales could be market movers. Durable goods will give a gauge of both manufacturing and the consumer and feeds into the final GDP report.

Facebook (NASDAQ:FB) shares are consolidating but are poised to break higher after the MACD (moving average convergence divergence) generated a buy signal. This occurs when the spread (the 12-day moving average minus the 26-day moving average) crosses above the 9-day moving average of the spread. The index moved from negative to positive territory confirming the buy signal. Resistance on the stock price is seen near the 50-day moving average near $65.10. Support on the shares is seen near the recent lows at $56.

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