Chart of the Week: Roku
Good morning everyone. Happy Wednesday. It’s time for our chart of the week, and this week we’re gonna be charting one of our old friends called Roku. ROKU is the symbol. It’s a streaming media company. This chart is starting to look really nice here. We added some of this on a breakout last week, and we think that this stock has more room to go here. It may consolidate a little but. But let’s take a look at the chart and see what we can figure out over here.
As you can see here, the stock has been kinda trading in a bit of a range for about five, six months here. You can see that making lower lows. But every time it seemed to get up to that $65 area, it was rejected about seven or eight times, and it made lower lows.
The stock broke out on volume last week
The thing is what we like to see here is that it broke out on big volume. We can certainly argue that the stock is still down, it’s still on a downtrend. Of course it is. But what we like to see is that a big breakout – again through a severe resistance level – and that would be about the 65 level. So last Thursday, on August 22, the stock bolted higher on big volume. I think it got an upgrade. It took off to the upside and it stayed above there earlier this week.
Now it’s encountering some resistance here on the 200 day moving average. And we are overbought on the relative strength. But look at that nice relative strength here. Higher lows and higher highs on that. Textbook. That’s what you like to see.
So, what could we expect from Roku?
We could expect a little bit of a move up to that 200 day moving average and then maybe a pullback here, possibly to test that level that we broke out. Maybe come close to it and then turn right back around and go up here in September. And once it makes a move above this recent high, which could happen in a matter of days, we think that it’s going to start making a move to start filling this gap from back in March. In March it dropped sharply over here on some news. And then in April it had the earnings report, and it did poorly after that. And again, making lower lows until it broke out free last week.
Indicators are turning
Now take a look at the indicators down below here. Again we showed you the relative strength. MACD is on a buy signal over here. But take a look at this money flow over here. It’s been bearish for about a month here. And then prior in May and June it was really bearish. And then it had a nice shot up over here.
But look – it’s come back to the zero line and it’s made higher highs on the stock. So that’s a sign that big institutions are not afraid to buy the stock down here in the 60s. Big institutions are going to be buying the stock to hold it for months, if not years. And that is the big difference over here from what it was earlier in 2024 where we have some big buyers coming in when the stock broke out, and they’re willing to hold it.
I like Roku over here. I think overall it’s going to make a move back to fill that gap before the end of the year. That’s a pretty strong move from even right now, but certainly from where it was back in the early part of August when it was in the high 40s. This stock being up to $69 over here, the stock is up more than 45% this month, in August of 2024.
We could certainly see a little bit of a pullback over here. I just think that pullback’s going to be pretty shallow, and it’s going to be an opportunity to add some shares or buy some calls in Roku when that happens.
So that’s Roku.
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