ROKU Trade on Nov 7, 2019 09:50 from J_Matrix: Tradervue User Stock Trades.

1st Day ER reaction

Big Picture:
The market has been consolidating for the past few days near the highs and this morning we had a gap up. The SPY is once again gapping up to all time highs mostly due to the catalyst of US-China trade deal. China says it has agreed with US to remove tariffs in stages. Signs of bullishness.

Intraday Fundamentals:
-ROKU had earnings report after hours on Nov 6th. The reaction is negative despite the earnings beat expectations for the quarter in losing less on revenue. Moreover, the ER call talked about how their monthly active users have increased and continue to do so.
Lastly, the ER call talked about slower then expected guidance for the next quarter to come, hence the sharp sell off on the news. -15 to 16% drop.
-RVOL elevated premarket
-ATR 7.44
-SF% 10.88%
-In. Own 73.20%

Technicals:
-ROKU hit the lows of 117.55 and held after it announced ER on Nov 6. This is a key support level from it's last earnings on Aug 8th
-After hours close was at 119.85. This price point is important because ROKU gapped up from it premarket on Nov 7.
-Support 115.25/117.55/119
-Resistance 119.85-120/121.65/124.80/127.80
-These price levels were relevant to me from prior trading experience on ROKU in the month of Sept and Oct.

Thesis:
-I thought that selling off 15-16% on this earnings call was a lil bit over exaggerated. The company did say their monthly active users have been increasing which is the most important piece of fundamental to pay attention to for a company that relies on subscribers for revenue. Furthermore, they did beat expectations for the quarter and their guidance is just a cautionary for slower growth. In a sense, the company fundamentals did not change drastic enough to dictate such a sell off in my opinion.
-If 117.55 key support from both prior earnings and Nov 6 after hours low holds, get long for a gap fill/squeeze for at least 1 ATR.
-If stock dips under 117.55 AND unable to reclaim, get short.

Reading the tape and trade management:
-From 9:47am to 10:15am the tape really told the story. Buyers were supporting the 117.50 price point and getting long using 117.50+/- as risk was a no brainer. Not to mention the double bottom that was put in during price discovery at 116.50 at 9:45am. ROKU made a nice H/L consolidation range afterwards and there was plenty of time to build a position.
-I think I could have added in more for the momentum long at the B/O of resistance of 119.85-120. Definitely could have done better from there.