When Roku Reports Know These Levels on the Chart

Roku is scheduled to report earnings on Thursday. But with shares up more than 100% from the lows, expectations may be high. Let's look at the charts.
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Eyes will soon be on Roku  (ROKU) - Get Report, with the company set to report earnings after the close of trading on Thursday.

Last week, it was mega-cap tech stocks that were in the spotlight. This week it’s been high-growth stocks, with Shopify  (SHOP) - Get Report, Twilio  (TWLO) - Get Report and others reporting their quarterly results.

When it comes to streaming, we’ve already heard from Disney  (DIS) - Get Report and Netflix  (NFLX) - Get Report. Both companies have turned in strong reports as it pertains to subscriber growth. With the impact of the coronavirus, there’s little doubt that Roku also had a strong quarter.

However, unlike Disney+ and Netflix, Roku also relies on advertising for some of its revenue. While streaming hours are likely to be through the roof, advertising could be a potential weakness.

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Trading Roku Stock

Daily chart of Roku stock.

Daily chart of Roku stock.

Roku stock has already enjoyed a healthy rebound, climbing more than 120% ahead of the print.

Shares are still well off the highs, down about 15% from the 2020 high and 27% from the 2019 high. However, the rebound makes it difficult to chase Roku into what’s likely to be a volatile event.

As of this writing, the options market is pricing in a $15.55 move in either direction by the end of the week. At current prices, that represents a move of roughly 11.6%.

We must take this pricing expectation with a grain of salt, though. Market makers are smart, but they don’t know everything. In this case though, the expected post-earnings move lines up with some notable levels on the charts.

A rally of $15.50 would put Roku stock up into the February high near $150. Incidentally, that high came after a post-earnings rally, which abruptly faded and led to a dramatic selloff in the stock.

On a pullback from $150, I want to see if shares trade back down to the 61.8% retracement for the 52-week range near $131. Over $150 and November resistance at $165 is in play.

A pullback of $15.50 would land Roku stock around $118.50, a notable level the August gap-up move (which was also on earnings).

Below this level and the 20-day moving average, could put $100 and the 50-day moving average in play.