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Earnings Breakout in FuboTV? Here's the Trade

FuboTV is rallying on better-than-expected earnings and a solid outlook. Yet the stock is fading from the highs. Here's how we can trade it from here.

FuboTV  (FUBO) - Get FUBOTV INC. Report has investors’ attention on Wednesday, with shares up about 8% after the company reported earnings.

While the stock does have a nice gain on the day, it’s well below the 14% rally FuboTV was sporting in premarket trading and notably off Wednesday’s high as shares were up 17.6% at one point.

The rally came after the company delivered a strong earnings report, with better-than-expected results and solid guidance.

It even has analysts jumping on board and raising their price targets. Some of those targets are now as high as $53.

However, whether it’s Netflix  (NFLX) - Get Netflix, Inc. (NFLX) Report, Roku  (ROKU) - Get Roku, Inc. Class A Report or another streaming stock, this group is having trouble maintaining momentum after earnings. Can FuboTV change that?

Trading FuboTV Stock

Daily chart of FuboTV stock.

Daily chart of FuboTV stock.

FuboTV opened higher by about 15% on the day, erupting over two key moving averages.

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That comes after the stock’s strong rally off the $25 level last week. It’s now above all of its major daily moving averages with this week’s rally. The key is keeping that statement true.

Should FuboTV stock continue to fade, keep a close eye on the $28.50 area. There the stock finds its 50-day and 200-day moving averages, while the 10-day moving average is quickly catching up.

This area should act as support if the stock dips this far. If it doesn't, the 21-day moving average is on the table, but more than likely, $25 will be in play.

The $24.50 to $25 zone has been solid support over the last month. It would be quite bearish to see the stock fade from a bullish post-earnings reaction. But for it to lose key support on top of that ... well, the bears would be in firm control. 

On the upside, keep an eye on the July high at $32.75 and Wednesday’s high at $33.68. Over the former puts the latter back in play, followed by the $35 area, which was resistance in June.

Should FuboTV stock clear $35, then the gap-fill level at $39.33 could be in play.

I don’t like big gap-up opens followed by deep fades, which is exactly what we have with FuboTV. The best course of action may be to give the stock a few days to see where it firms up.

If we get a dip down to the 50-day and 200-day moving averages, bulls may consider it as a dip-buying opportunity.