Roku Slumps As Elliott Wave Correction Unfolds
EWM Interactive | Sep 28, 2021 12:20AM ET
We last wrote about Roku (NASDAQ:ROKU) in the spring, on May 24, 2021. The stock was hovering around $330 a share. Fundamentally speaking, we thought that even this was too high a price. A quick look on the company’s weekly chart, however, convinced us that “Roku ‘s bubble can keep inflating”.
Not indefinitely, though. The anticipated rally was supposed to fit in the position of (5) within a five-wave impulse pattern. Wave (5) was expected to exceed the top of wave (3), making targets in the $500 a share area plausible. Take a look below.
Wave (5) did exceed the top of wave (3), but it couldn’t even reach the $500 mark. Instead, the bears returned as soon as the impulse pattern was over. It took wave (5) two months to develop and then two more for wave (a) to cancel almost all of it out.
If this count is correct, waves (b) up and (c) down have yet to form before the entire wave cycle is complete. A drop to less than $300 is still on the cards. Trouble is that with Roku ‘s persistent extreme overvaluation, how far below $300 can wave (c) drag the stock is anyone’s guess.
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