Miles J. Stoner, @StockHollywood

Dallas, Texas

2.09.2012

IRBT - Long Argument

IRBT -  quick trade 25.5 is support http://prntscr.com/5zrvy , blew through 2 support levels, got d/g's, and this drop is from eps, but this 26 cross could bring short term gain, or wait and swing it.

Looking deeper into the situation. Stock is hitting real support at 23-25.5 (if you can't read the chart then just right click and click view image).

Early Bird Capital said that IRBT reported 4Q11 EPS of $0.38 on revenue of $130.8 million. “This compared to our forecast for EPS of $0.32 on revenue of $134.4 million versus the consensus of $0.32 on revenue of $134.0 million."  Article Link
  • With that being said it wasn't a total failure of an earnings miss, not enough to knock the stock down close to its lowest levels in 6 months ($22.46)
Shorter term (20wks) we see a stock that should have held these support levels and most likely when it reverses and bounces back these will be short term targets of when to take profits. The more panic drop the better so we can capture more points to the upside.

Now we look at the move after earnings hit and we see a stock that dropped after hours and tried to hold 30, then premarket the next day it tried to hold 25.5ish and has done so thus far, but I think if we wait it out we could get our ultimate entry around 23.11-25.5, which I know is large, but this isn't an exact science and this will be a swing trade with upside of  27-30+.


The Question is when do you get in then?
  • I recommend a feeler soon, a starter size position so you can get a feel for how the stock moves (this could be 50,100, 200 shares).
  • Act as if the stock will go to 23 and play and build into your swing position accordingly trying to get your average as close to our magic # as possible. 
Disclosure:
I have no position at this time, but intend on taking a position in the manner I just described over the next few days, depending on stock, mkt movement.