Are you a Roku (ROKU) fan? If so, here’s how you can trade it. (August 27, 2018)
ROKU
Let’s look at Roku ( NASDAQ: ROKU ) today and here’s why: Just a couple weeks ago, on the 10th, the stock printed a new high, an all-time high. You can see when the stock started trading, this was a really promising pattern where it had pulled back and just kind of formed this little kind of a bowl; I guess you could say cup since ultimately we are talking cup and handle here. It just formed this little bowl but the trough was pretty deep.
If you look at this as the actual high it was, we’ll say close to 60.00, the stock really got undercut by half. That was a pretty deep bowl; but the stock recovered, this was a while ago, and then it formed this little consolidation pattern here. It broke out on strong earnings and did not pull back very much. You can see it pulled back a little bit but it really did not pull back much at all. After this big move higher, this big spike in volume, volume has been declining ever since and the price has been staying the same.
So what is this telling you? It is telling you that there is not a lot of distribution here. There is not a lot of profit taking. If there were you would see really super heavy volume and this price would be declining a little bit. Now we are seeing above average right now, it is starting to perk up here over the last several days and the stock has been moving higher.
So the idea behind parsing volume and price together is that if a price moves in a certain direction, I am talking about kind of a trend, several days or something, although it can be intraday for that matter, the move is more believable if there is volume behind it. If the stock is moving UP and it’s heavy activity, that tells you that there are real buyers, they’re buying.
If the price is looking the same exact way, it’s moving up but volume is LIGHT then that actually tells you that there are NOT real buyers there is just a bit of a sellers strike. Sellers aren’t really stepping in to hit those bids. The price activity is the same but the volume is different. So here, the fact that Roku ( NASDAQ: ROKU ) has done what it has done and then last week broke out to a new high and it is starting to move higher on volume, that is a good sign for me.
What I would suggest doing is, this is not a good entry for Roku ( NASDAQ: ROKU ), the entry was back here but we can’t go back and redo every day. But if you are long this stock you have to kind of be happy with the way the stock is moving. Give it quite a bit of room because this stock could actually pull back 15 percent or even a bit more and there would really be nothing wrong with the way this stock is trading. So I am giving this stock a lot of room personally; part of the reason is because I am looking at this, I see this kind of pullback, 50 percent, $30.00. I have mentioned this before, in fact, I am pretty sure in this Free Chart video; my price target on this is $90.00. I think we got a double here. I think we are going to get 50 percent more up to $90.00.
Free Chart