Rovi Corporation (NASDAQ: ROVI)

Rovi Corporation provides integrated solutions that enable the discovery, delivery, display, and monetization of digital entertainment. It offers content discovery solutions, including interactive program guides; search and recommendations; cloud data services; and database of information about television, movie, music, books, and game content. The company also provides video display and delivery solutions consisting of video compression-decompression technology to enable distribution of content across the Internet and through recordable media in either physical or streamed forms; and content protection technologies and services, as well as advertising solutions comprising Rovi Advertising Network and the Rovi Advertising services. In addition, the company licenses its media content/metadata, MainConcept codecs, and content protection technologies to entertainment companies. Its solutions are used in the cable, satellite, consumer electronics, entertainment, and online distribution markets worldwide.

Please take a look at the 1-year chart of ROVI (Rovi Corporation) below with my added notations:

1-year chart of ROVI (Rovi Corporation)

ROVI had a rough summer and fall as the stock fell from $26 all the way down to $16. In a market that’s been going consistently higher, ROVI continued to break lower. A level that seems to stand out on the stock is $20 (blue). You can see how $20 has been both support (April) and resistance (August and October) throughout the year. Late last week the stock broke back above $20.

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The Tale of the Tape: ROVI has broken $20 and should be moving overall higher. Traders could enter a long trade at or near $20, while a short trade could be made on a break back below that level.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!

Good luck!

Christian Tharp, CMT

Follow me on Twitter: @cmtstockcoach