Bears cleaned up in iRobot (NASDAQ:IRBT). But given time to pick up the pieces, the real first-mover advantage may still lay with iRobot stock bulls in the weeks ahead. Let me explain.
Bottom — or more aptly, the squiggly price — line on the iRobot stock chart, it sucked to be long IRBT following this week’s Q1 corporate confessional. The robotics outfit best known for its Roomba vacuum products beat analyst profit views and reaffirmed its aggressive full-year outlook. But investors didn’t exactly buy what management was selling.
iRobot shares plummeted 23% Wednesday as Wall Street took the longer-term forecast with a grain of salt. Investors are betting the company won’t be able to clean up with strong second-half sales after issuing weaker Q2 guidance on the sullied heels of Q1’s light revenues excused as temporary due to the timing of new products and high existing inventories tied to new trade tariffs.
Still, for patient investors willing to filter out some of the near-term dirt and buy into an outfit with built-in, first-mover advantages forecasted to grow 18% annually over the next five years, opportunities could be emerging on the iRobot stock chart in the weeks ahead.
iRobot Stock Weekly Chart
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Further, with the weekly stochastics not setting up as an ally for buying decisions at the moment, this point is even more important to consider. And of course, there’s no guarantees the cycle of higher highs and lows will continue, so buying today could prove an even bigger mistake.
As much, it’s critical when bullish iRobot stock investors make their initial move to buy shares, they do so as efficiently as possible. One way is to drill down the price action to the daily chart as the devil can be in the details.
iRobot Stock Daily Chart
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The daily chart of IRBT does a nice job of defining three different buying zones supported by Fibonacci cycles dating back to 2016. This time frame also allows a prior earnings gap, as well as a key higher low within the uptrend, to be integrated into these buy zones and seen more easily.
The recommended takeaway of combining the two chart views in iRobot stock is to wait for a weekly chart two-candlestick bottoming pattern to emerge within one of the targeted price zones. And if they don’t? That outcome and many other scenarios could always play out of course. That’s investing.
Optimistically, should this approach work its way onto the iRobot stock chart, it’s also likely to allow the weekly stochastics to be more strongly-positioned for buy decisions. That’s good news. The strategy also allows IRBT bulls to set an initial stop-loss beneath the support area and better define one’s risk. That’s certainly another benefit. Overall, this strategy sounds good for bullish investors looking for a cleaner entry into iRobot shares.
Disclosure: Investment accounts under Christopher Tyler’s management do not currently own positions in any securities mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional options-based strategies, related musings or to ask a question, you can find and follow Chris on Twitter @Options_CAT and StockTwits.
