As promised, here's the STE-BY-STEP blog post on our ROKU trade, we made at the ART OF TRADING service 2 days ago...
What I love most about this trade is it was a combination of 4 of my favorite things that i actively look for when trading:
1: Momentum Stock with HUGE short interest(short squeeze candidate).
2: An awesome lookin "Holy Grail" setup.
3: A Falling Wedge setup
4: ROKU was on the "POWER EARNINGS GAP" watchlist.
So here we go....
ROKU is on my "POWER EARNINGS GAP"(PEG) watchlist.... Long time AOT members or twitter followers know how powerful these PEG stocks can be....
ROKU hit my scans on Nov. 8thth after it made that super sweet "Power Earnings Gap" ....
So once, a stock that EXPLODES higher like the way ROKU did, these are normally the BEGINNING of a much bugger move to come.... However, i prefer to not buy the stock on the big POWER EARNINGS GAP(PEG), I prefer to simply, be patient for a better risk/reward setup to emerge....
A few weeks later....
ROKU did eventually started what i like to call a "SMART" pullback.... A smart pullback is when a stock that been running strong on big volume, makes new high(s) and then starts a "slow and controlled" low volume pullback to a KEY support area.....
After tracking ROKU on my "PEG" watchlist for a few weeks.... Here's the setup that caught my eyes... I immediately tweeted it out to ART OF TRADING members and also on my @TraderStewie public twitter stream....
Note, how ROKU pulled back 7 days in a row on very low volume !! That fact that it pulled back 7 days in a row made this setup extremely attractive from a Risk to Reward perspective!
Also note how ROKU is holding the 20 Day Moving Average(this is a classic "HOLY GRAIL" setup!
Market was weak on the day ROKU caught my eyes, but i noticed that despite the market weakness, ROKU remained rather steadily above the 20 day MA, just sitting there and absorbing the action.... (Just like a coiled king cobra, laying low in silence, ready to ambush and attack in a BIG WAY!)
Always remember this..... From CONTRACTION comes EXPANSION!
This is especially these highly shorted momentum stocks like ROKU...
ROKU has a short interest of about 40%!! That's just insanely huge(in other words almost HALF the float is held in short positions!) and told me that if this stock was to reverse from RED to GREEN as it tested the 20 Day MA after a 7 day back to back pullback,then this stock was sure to EXPLODE higher as some of the folks holding short positions in this stock are surely going to cover and squeeze this bad boy in a dramatic manner!!
As if all i mentioned above isn't a good buy signal as it is, i noticed ROKU was setting up a FALLING WEDGE pattern(my favorite trading pattern ever!)....
Check it out!
The setup is there for the taking.... so now it's time to start planning the trade....
If I go long here at $39.30 area, where's my stop loss? What position size should I take? How volatile is this stock? Does is make more sense to take a smaller size position and use a wider stop loss since this stock can be volatile? What's my holding time frame? What's my target?
All these little calculations are going in my head in a matter of milli-seconds....
...Confidence is SUPER HIGH, we have a killer trade on our hands...
All trade alerts are Emailed, SMSed and tweeted.
So i officially alerted ROKU for AoT members:
Long ROKU at 39.30 stop loss at 37.00 HALF SIZE target: $50 to $51
I even shared this setup on the public twitter : @TraderStewie
and even tweeted numerous times to keep an eye on this ROKU because this stock(with this kind of short interest), once it goes from RED to GREEN, this thing is like a loaded weapon, ready to EXPLODE!
Within a few minute, the stock started to show hints that it meant business.... It slowly started to drift, bob n weave.....
ROKU going green here.... if this bad boy closes GREEN today, watch out above since this stock has INSANELY huge short interest. Almost 40% short interest!
Folks, we have movement.....
GREEN ON THE SCREEN....
$ROKU about to RockOut ?
Almost 40% short interest in this bad boy!
Once i saw that big volume SPIKE at 2:10PM, i was very confident, ROKU has "AWAKEN" and its ready to ATTACK higher in a major way! I've seen this too many times in the past and can just "feel it" comin!
The 15 minute charts, shows how GORGEOUS that FALLING WEDGE pattern was in ROKU...
Literally, it's a "TEXT BOOK" Falling Wedge pattern....
Once ROKU broke that Falling Wedge, i knew this stock wasn't turning back any time soon!
ROKU is now RUNNING STRONG and the momentum PLAYERS are hopping on board the moving train and the stuck shorts head for "cover".... It's a PILE ON effect at this point.... like a domino effect...
At this point, ROKU is up over +$4 in a matter of 2-3 hours of holding it!
Here's how the stock closed on that day !!
A thing of ABSOLUTE beauty !
....We kept raising stops as ROKU kept ramping higher....
Raise ROKU stop loss to $42.00
Raise ROKU stop loss to $43.00 We are up almost $4 on this beauty ! Keep raising those stops!
Stopped out ROKU at $42.90
The feedback from both Art Of Trading members and also my twitter followers was THE BEST part of this trade!!
Longtime AOT and
@traderstewie follower. Highly recommended. I believe he posted this idea in his public stream.
ROKU Options +525% :o
(ROKU call options)Now up 400%. Trimmed 1/4. :)
Bought a few Dec 45 calls. Currently +255%. Nice work Stewie!
Enough for me on this ROKU! Brother absolutely fantastic call!
@AOTtrades!! Keep 'em coming:)
Thanks for sharing! After reading your tweet, I bought
$ROKU Dec 40 calls. Just sold half for a double.
Bud hell of a call. Thx bc I purchased $40 calls for next week
at $1.65 earlier..near double!
Thanks Stewie ..... just bought some new Blizzard skis off the trade
$Roku trade . luv you !
"Amazing timing! That could most likely be the best call you've done since I joined AoT!"
Jesper S.J. (AoT member)
"Stew, I made a mighty nice sum on this (ROKU)trade. I got in soon after I emailed you and went for the ride! Sold for a great profit. It must be a great feeling going home for you knowing you made a nice call for a lot of people today. Thanks and hope you have a great night!"
Mark R. (AoT member)
A picture speaks better than 1000 words. Thank you for all your invaluable lessons throughout 2017,
$ROKU trade alert and all the other ones @traderstewie #SantaStewie
I hope you all found this post educational and helpful!!
I gotta confess something, the best part about this trade, is the number of people who made some amazing profits from this ROKU trade.... I get a big time rush helping other people make money and especially when i teach my techniques and strategies and see people benefiting from them!!
Gives me a tremendous of pride and immense pleasure seeing traders "earning and learning"!
Join the ART OF TRADING today!!