$ROKU is Rockin’ – November 11, 2022


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Let’s get into media, Roku ( NASDAQ: ROKU ).  Like so many other stocks, this has been on a nasty steady downtrend. But I look at what happened here, I am pretty sure this was the date that earnings were released, you see this stock gapped way down, massively down. And then immediately ran higher, so this was a huge washout.

This was not the kind of day that shareholders liked if they are already holding the stock. And that is why a lot of them dumped the stock right at the open. So this is kind of a typical washout, where the stock had been trending lower, and lower, and lower. Oh my god, earnings are crappy, boom, sell the stock. And then buyers come in saying, Well gosh, I think this is horrible. Could they get any worse? The answer is, no. Well, we better buy this stock.

So now, since that opening print, the stock is up 33 percent, that’s a massive move. But the most impressive thing is that is moving up on heavier volume and it is now back above the 50-day moving average. Now, I have no idea whether Monday is going to bring another day like this or maybe a little pullback. But I have a pretty good idea that this is the bottom, right here at $45.00.

So what I would suggest doing, first of all, if the stock starts running higher on Monday I think you have just got to say, Alright, this thing has some momentum so I will go ahead and buy the stock, and then give yourself a reasonable risk profile, where you’ve got a logical stop very close to where you bought it as it is, after these 2-days you are chasing.

However, if you are looking at the stock as far as, okay it’s at a buy signal because it is above the 50-day moving average. Then you’re really not chasing, the stock just broke out above that level. What I am saying is, if you are buying the stock here you can’t have your stop down there, that’s over 25 percent, that’s way too loose.

So just make sure you’ve got some kind of risk management in place. As long as the stock stays above the 50-day moving average, I think this is a stock that could work pretty well.

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