Summary:

• Netflix called to open sharply lower after disappointing results
• Goldman Sachs posts 44% jump in net profits; Solomon new CEO
• US indices pull back from recent highs

Shares in Netflix could be keenly followed on the Wall Street open in less than half an hour at 2:30, after the streaming giant delivered an underwhelming trading update. Given the sharp move lower in out-of-hours trade it may come as something of a surprise to learn that the firm’s earnings actually exceeded expectations with an EPS of $0.85 comfortably higher than the $0.79 consensus forecast. Revenue was a slight miss in coming in at $3.91b vs $3.94 forecast, and still up markedly on the $2.79b the year before. The reason for the slide is likely due to a fairly dramatic drop in the number of users, which rose by just 5.2m compared to the 6.2 estimated by the company itself back in April. 

 Netflix is called to open lower by more than 10% which would see the market drop below the 23.6% fib. Is this a buying opportunity in a prevailing uptrend or has the market topped out? Source: xStation

There was far better news for investors in Goldman Sachs with the bank recording a 44% jump in profits, as it posted its best half year results since 2009, buoyed by a continued rebound in the fixed income side of the business. The figures themselves saw EPS of $5.98 for Q2, well above the $4.66 predicted. Revenues for the quarter came in at $9.4B, again far higher than analyst forecasts of $8.7B. In another major development for the bank, they announced this lunchtime that David Solomon, will be taking over from Lloyd Blankfein as CEO, with the latter running the firm since 2006 and seeing it through the global financial crisis. 

 Following the strong trading update Goldman Sachs may be set for an attempted rally with the stock having been in a near constant state of decline so far this year. Source: xStation

Turning the attention to the broader indices in the US, there has been a bit of a pullback with the US100 retesting its breakout level around 7315. Given that Netflix is a fairly large component of the index and one of the chief contributors to the gains this year it is unsurprising that the market has dropped back and today’s closing level could be key. Should price finish back below 7315 then the breakout seen last week may be deemed false but if price can end today back above this level then the breakout remains valid and more upside could lie ahead. 

 The US100 could be set for a pivotal cash session with 7315 a potentially key level to watch out for on a closing basis. Source: xStation