Netflix Inc. (NFLX​) soared nearly 6% on Tuesday after signing a licensing deal with China's iQIYI, according to Variety. The Baidu Inc.-owned (BIDU​) iQIYI, a top video portal in China with nearly 500 million monthly viewers, may finally provide Netflix with access to the country’s massive population after having been blocked by regulators.

A Netflix spokesperson told Variety that it’s too early to provide many details in terms of timing, but traders have been bullish on the narrative. Despite the positive news, investors should keep in mind that Chinese regulators keep a tight grip on the media and entertainment industry and may block the deal for any reason. The Chinese government also has strict Internet censorship solutions in place, which could block Netflix’s content from being streamed by Chinese consumers. Variety warns that these controls could require entire series to be approved before a show can begin to be carried in the country.

Investors also remain concerned over Netflix’s high spending on original content that has taken a toll on its financial performance. Like Amazon.com Inc. (AMZN​), the company plans to continue operating at a loss to further expand its dominant market position, but it faces rising competition from Hulu.com and other competitors. Traders should keep in mind that second quarter earnings could introduce volatility as the market watches these costs and subscriber additions.

From a technical standpoint, Netflix’s stock has entered into new territory touching a record high $153.52 per share earlier this week. The stock soared past its R1 resistance at $151.31 and is quickly approaching R2 resistance at $154.82. Traders should look for a breakout from these levels or a retracement back to trend line support at around $150.00. The relative strength index (RSI) appears lofty at 66.33, but the moving average convergence-divergence (MACD) could see a bullish crossover after a lot of sideways movement since February.

Charts courtesy of StockCharts.com. Author holds no positions in stocks mentioned except for in passively managed index funds. 

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