Months ago I wrote a post as to why I liked IRBT short. It was all about the 39 level and the potential harmonic pattern setting up at all time resistance. I was simply wrong on the harmonic, but there's no doubting the significance of 39.
Let's zoom ahead to today. We can see the stock couldn't close above 39 despite numerous attempts. Then Tuesday, it finally happened with a push to 44.
Since the breakout, I've tweeted on stocktwits a fib grid and the plans for an entry in the 40's.
L $irbt at a 40.20 ave. Roughly 10% size. Protective stop with a close under 39This morning, we gapped right into the only real attractive fib retracement zone. It moved all the way down to 40 quickly and I put an order in.
— Aaron (@a_jackson) Feb. 13 at 09:33 AM
One key thing I want to note is I put a market order in. If you have a plan working just as you expected, you can mess it up quickly by entering a limit order if the stock reacts strongly to you're planned level of entry.
As for a planned exit; i'm not even entertaining the thought of it right now. My protective stop is on a close under 39. That's it.
Why? Well this robotics theme is coming at us harder all the time. It appears high quality robotic technology is all of a sudden reaching an inflection point. Have you seen the action in some of these robotics plays? In August, ADEP was a 3 dollar stock, it's now at 18 and they can't even shave more than 3 point off it without buyers stepping in.
Sentiment on stocktwits is amazing bullish (for the stock) right now. Investors are disgusted this thing is moving without them. The public has been butt hurt by this stock over and over. On top of all of that, you also have spam bots out there talking shit just to knock some poor folks out so funds can get a better bid.
Also, short interest is rising. Note there are only about 29 Million shares in the float. Data courtesy of nasdaq.com
You might be able to compare this to the recent IPO base breakouts (although this is much larger) of YELP, TSLA and LNKD.
This combo of price, sentiment and float characteristics is what I do this whole stock market thing for.
Hopefully somebody followed me on this one, because we have a pretty awesome risk:reward right now to just sit tight and let this EAT!
