Netflix, Inc. (NASDAQ:NFLX) is consolidating on Wednesday. Since the middle of April, the shares have lost about 30% of their value.

But they may be getting close to a bottom. This is why Netflix is the Stock of the Day.

Over the past two months, there has been more supply than demand for Netflix. The sellers are forced to offer their shares at a discount if they want to attract demand or buyers into the market.

This pushed the stock into a downtrend.

This trend may end soon. As you can see on the chart, there has been support around $75.70. This is where the selloff ended in February.

At support levels, there are enough buy orders to absorb all of the sell orders. Selloffs end or pause at support levels.

After finding support in February, Netflix rallied. When this happened, many investors and traders who sold at support later regretted their decision.

A number of them decided to buy their shares back. But they also decided that they would only do so if they could get them for the same price they were sold for.

As a result, if Netflix returns to the support level, they will place buy orders. If there is a significant number of these orders, it will create support at the level again.

Sometimes stocks rally after reaching support. This happens when some of the people who created the support become anxious and impatient. They are afraid that sellers will go to other buyers if these buyers are willing to pay a higher price than they are.

So they increase their bid prices. Other concerned buyers see this and do the same. It can result in a snowball effect that puts the shares into an uptrend.

This dynamic could be about to happen to Netflix. The shares may be poised to rally.

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