It's been a long, long time since I've had anything positive to say about Roku, Inc. (ROKU), but it's at least beginning to show signs of a bottom in place. The first two real bullish signs emerged together. At the start of November, ROKU reported earnings and they weren't good. Clearly, bad news had been anticipate, though, as ROKU has fallen from 240 to start the year to under 45 on the November 3rd open. Higher interest rates and slowing growth have taken a massive toll on the stock, but when is enough enough?
Enter ROKU (ROKU):
I see a possible exhaustion gap on that November 3rd open. There's a solid hollow candle that day as buyers completely took charge. It was the second highest volume day of the year and these types of "throw out the kitchen sink" bottoms are typical after a lengthy decline. That low also occurred with a much higher PPO, so a positive divergence was printing. This effectively tells us that selling momentum was slowing and the bulls took advantage of it. We've now seen the PPO reset at the centerline and the 50-day SMA tested (blue arrows), which is what I look for initially after a positive divergence prints. So here's the next big technical question. Can we hold the rising 20-day EMA and break out above the recent price high? If the question to both those questions is yes, then we have a likely bottom.
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Happy Trading!Tom BowleyChief Market StrategistEarningsBeats.comBetter Timing. Better Trades. |