Bear Signal Sounds for Struggling Streaming Stock

ROKU has lost nearly 15% in the past three months

Digital Content Manager
Jan 27, 2020 at 1:12 PM
    facebook X logo linkedin

    Streaming concern Roku Inc (NASDAQ:ROKU) has taken a breather recently, off roughly 15% in the past three months after an early December bear gap put the shares back below familiar pressure at the $150 region. Today, the stock is gearing up for its lowest close in almost three months -- down 3.4% to trade at $125.55 at last check -- and just ran into technical trouble that could drag ROKU even lower, should history repeat itself. 

    Specifically, Roku just came in contact with its 40-day moving average. Two similar signals have flashed since the stock first began trading in late 2017, according to Schaeffer's Senior Quantitative Analyst Rocky White. One month following these previous signals, the stock was lower both times, averaging a 12.16% drop. A similar move from its current perch would put ROKU just above the $110 area, where it hasn't traded since early October. 

    ROKU Jan 27

    This recent negative price action has been exacerbated by short sellers, with short interest rising 8.8% in the last two reporting periods. Now, the 11.73 million shares sold short represent 14.3% of ROKU's available float. Continued short selling could create bigger headwinds for the equity. 

    A round of analyst downgrades, should ROKU continue its slide, could create additional pressure on the charts. Currently, 11 of those in coverage consider the security a "buy" or better, while only five call it a "hold" or worse. 

    With Roku earnings expected out in mid-February, short-term volatility expectations are running high -- meaning Roku options premiums are relatively rich at the moment. The stock's Schaeffer's Volatility Index (SVI) of 85% sits in the relatively high 42nd percentile of its annual range.

    However, the streaming stock has tended to make bigger moves than what the options market has priced in, looking back 12 months. This is per Roku's Schaeffer's Volatility Scorecard (SVS), which sits at a relatively high 93, out of a possible 100.


    Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

    This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

    On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

    Start targeting gains like the ones our subscribers have seen recently, including:

    213.3% GAIN on AutoNation calls
    100.0% GAIN on Monster Beverage calls
    100.4% GAIN on Walgreens Boots Alliance puts
    100.4% GAIN on ON Semiconductor calls
    257.7% GAIN on Dell calls

    101.0% GAIN on Apollo Global Management calls
    103.6% GAIN on JP Morgan  Chase calls
    105.3% GAIN on DraftKings calls
    101.3% GAIN on Airbnb calls
    203.0% GAIN on Shopify calls
    102.0% GAIN on Cboe Global Markets calls
    100.9% GAIN on Boeing calls
    102.1% GAIN on Microsoft puts
    102.3% GAIN on First Solar calls
    101.5% GAIN on PulteGroup calls
    101.0% GAIN on Apple calls
    209.4% GAIN on NXP Semiconductors calls
    100.8% GAIN on Uber Technologies calls
    100.4% GAIN on Academy Sports and Outdoors puts
    102.2% GAIN on Trade Desk calls
    100.8% GAIN on DoorDash calls
    100.0% GAIN on Camping World Holdings puts
    100.0% GAIN on Cboe Global Markets calls
    100.2% GAIN on calls
    238.5% GAIN on Oracle calls



    Rainmaker Ads CGI