Shares of Roku, Inc. (ROKU) are up sharply this morning and Real Money's Jim Cramer mentioned it on Mad Money Wednesday evening. The streaming-video company reported Wednesday night it had surprising profits with a top-line beat. Also, the company reported that it had launched a free streaming channel on the web. ROKU is a relatively new issue and we do not have a lot of trading history to work with. But let's take a look at what we do have.
In this daily bar chart of ROKU, below, we can see that prices have been climbing from early April and that they gapped higher Thursday morning. ROKU was already above the rising 50-day moving average line and the bullish, but limited, 200-day line.
The daily On-Balance-Volume (OBV) line was in a decline from November and traders took profits from the early IPO rally in November and December. The OBV line shows some uneven improvement from May. The trend-following Moving Average Convergence Divergence (MACD) oscillator has been above the zero line since late May and should soon cross to the upside to a fresh go long signal.
In this Point and Figure chart of ROKU, below, we can see the price run-up Thursday morning without a gap. A price target of $77 is now being projected. A trade at $59 would be a clear breakout.
Bottom-line strategy: ROKU is up sharply this morning but I would not be surprised to see a large part of this price gap to be retraced. With a $77 Point and Figure price target I would look to probe the long side of ROKU closer to $50 risking below $45 with my sights on the $75 area.