The shares of Roku Inc (NASDAQ:ROKU) are up 1.7% at $305.84 this morning, following an upgrade from Truist Securities to "buy" from "hold." The analyst also cut its price target to $367 from $480, though, despite citing multiple revenue growth opportunities and attractive valuation. 

Analysts have been mostly bullish towards the security. Coming into today, 13 in coverage called ROKU a "buy" or better, while six said "hold" or worse. What's more, the 12-month consensus price target of $474.54 represented a 57.8% premium to current levels. 

A technical look shows Roku stock taking a fairly deep tumble off its Feb. 16 all-time high of $486.72, guided lower by the formerly supportive 20-day moving average. The 160-day moving average could act as a floor for ROKU going forward, and the security still sports an impressive 238% year-over-year lead. 

While call volume is still winning overall, option traders have rarely been more bearish. This is per ROKU's 50-day put/call volume ratio of 0.72, which stands higher than 96% of readings at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This implies puts are being picked up at a much quicker-than-usual clip. 

Lastly, the security's Schaeffer's Volatility Scorecard (SVS) sits at an elevated 92 out of 100. This indicates the security has exceeded volatility expectations during the past year -- a great thing for options buyers.

The shares of Lululemon Athletica Inc (NASDAQ:LULU) have been in a rut for the better part of March, trading in a narrow channel contained by the $300 and $320 levels. This upper level has served as a ceiling since late-February, and continues to elude the equity during its pre-earnings session, in which it was last seen down 0.2% at $313.48. LULU is expected to report earnings after the close tomorrow, March 30. 

A further analysis of LULU's technical troubles shows the 40-day moving average keeping a lid on shares for the better part of 2021, guiding the stock to a near 10% year-to-date loss. There still looks to be support at the 320-day moving average, however, and year-over-year, the apparel name boasts a 66% lead. 

The equity could be facing some headwinds from the brokerage bunch, too. Today, Deutsche Bank slashed its target price to $396 from $400, and yesterday Piper Sandler cut its estimate to $478 from $490. This puts the 12-month price target at $402.45, which is a 27.9% premium to current levels. Meanwhile, 17 of the analysts covering the stock call it a "buy" or better, while eight say "hold."

Sentiment has been unusually bearish at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), where 1.06 puts have been picked up for every call -- a ratio that stands in the high 85th percentile of its annual range. 

There may be a historical reason for some of this pre-earnings negativity. LULU was in the red after its past five earnings reports. Its three post-earnings moves prior, the stock saw positive returns, averaging a swing of 6.5% during these past two years, regardless of direction. This time around, the options pits are pricing in a slightly bigger move of 9.7%. 

Below is a repost of an article from Benzinga.com, which features Schaeffer's V.P. of Research, Todd Salamone.

Small-Cap Stocks Have Been On The Rise In Recent Months, Here's What Traders Can Expect In 2021

Small-cap stocks have been soaring over the past few months, with the small-cap Russell 2000 Index (RUT) outperforming large-cap indexes such as the S&P 500 and Nasdaq 100 that are relatively flat on the year.

The Russell 2000, which tracks 2,000 small-cap companies, is up 18.5% year-to-date as of March 18, 2021. In comparison, the Nasdaq 100, which is made up of the 100 largest non-financial companies in the technology-heavy index, is up 1.2% YTD. Although still early in 2021, this marks a distinct change from previous years in which value-oriented small caps have struggled to garner quite the same investor attention as more high-profile, performance stocks.

In further examining the rise in small-cap stocks, Senior Vice President of Schaeffer’s Investment Research Todd Salamone spoke with Benzinga regarding his thoughts on the rise of small caps, as well as, what small-cap companies investors should keep an eye on and how investors can position themselves for an economic rebound.

Salamone also attended the recent Benzinga Global Small Cap Conference, which took place from March 24-25, to share the following analysis as well as additional insight with attendees. The two-day conference featured presentations from executive leadership of small-cap stocks, specifically in the biotech industry. 

Will The Small-Cap Rally Continue?

Small-cap stocks have had a remarkable run during the pandemic. As a result of this growth, many traders have been left to question whether or not this trend will continue in the months ahead. 

According to Salamone, the technical picture of Russell 2000 and ETFs like the iShares Russell 2000 ETF (IWM) does suggest that the rising trend will likely continue.

At the end of 2020, the iShares Russell 2000 ETF (IWM) experienced a breakout above the $175 area, which is double the $86-$87 resistance level that was in place from 2007-2012, Salamone noted. 

“In fact, the $175 area marked a huge IWM peak in late 2018 and this level didn’t get taken out until late last year. In other words, there was a lot of profit-taking as buyers that bought the 2013 breakout re-assessed risk from 2018 into late 2020,” said Salamone.
  
He also noted that long-term breakouts such as this one are usually long-lasting, “especially when there are still many pessimists, which was the case in late 2020 as was evident by the huge short interest on IWM components.”

Companies To Watch

Schaeffer’s Investment Research favors companies that display strong price action while sentiment measures indicate some lingering doubt. Salamone noted that this skepticism represents future buying power as the market is proving naysayers wrong who might be forced to eventually capitulate.  

Given this preference, here are a few names on Schaeffer’s radar in the small-cap space:

Shake Shack Inc (NYSE:SHAK) is an American burger chain with about 275 locations worldwide and a $5 billion market cap. Given the number of locations and current market cap, this leaves room for tremendous growth potential for the company as the world continues to slowly step out from under the shadow of the pandemic. In 2021, the stock has hit new all-time highs, with current YTD performance up 40% as of March 18, 2021. The company also has the potential to garner future positive sell-side attention, as only four of the 23 analysts following SHAK rate it a buy. 

United States Steel Corporation (NYSE:X) and Alcoa Corp (NYSE:AA)  U.S. steel is an American integrated steel producer and Alcoa is an American industrial company as well as the world's eighth-largest producer of aluminum. Both companies have market caps of around $6 billion and low analyst ratings, which provides them with a lot of upgrade potential. 

Aspira Women’s Health Inc (NASDAQ:AWH) develops gynecologic tests for identifying ovarian cancer and other gynecologic diseases. The company has a market cap of less than $1 billion. They expanded network access in October. AWH had a multi-year breakout in late January above the 2011 intraday peak but shares were still well off from their all-time high in 2003.

Sonos Inc (NASDAQ:SONO) is a developer and manufacturer of wireless, multi-room audio systems. The company has a $5 billion market cap. In November, the company announced a buyback plan and shares gapped higher in mid-February on earnings. Shares are currently surging both YTD and year-over-year, up 72% and 479% respectively.  

Economic Rebound

Speaking on small caps holistically, Salamone singled out the iShares Russell 2000 ETF (IWM) as offering diverse exposure to the small cap segment. The ETF is comprised of stocks throughout 11 different sectors, with the five biggest areas of exposure being a mix of growth and value segments like health care (the largest), consumer cyclicals, industrials, financial services, and technology (the smallest).

Salamone noted that investors may want to keep these main sectors in mind when putting together their portfolios.

“The interest rate environment in recent months has favored financial services and industrials, and consumer cyclicals are a great way to position yourself for an economic rebound.”