Let’s look at my favorite George Jetson stock: iRobot (IRBT)

iRobot ( NASDAQ:IRBT ); this kind of has the look of a really sloppy cup and handle. You can see the cup here, you can see this handle that’s been pulling back, fairly low volume here, during this downdraft there have been some higher distribution days, but still the pattern remains. Here’s where the prices are, this stock is down, the current low is 40.00, we’ll say the current high is 48.00, so you’ve got about a 20 percent range here; going forward this is where the stock is. If the stock breaks out, because this is one of those goofy stocks, robotic vacuum cleaners, George Jetson.

If the stock breaks out I think it’s a buy, you know it’s going a lot higher, because that’s what this pattern does, that’s what happens here, if the stock breaks out. But if it doesn’t, if it pulls back over the next few days, a week or something like that, if you get a chance to buy it near 40.00, I would absolutely want to do that. You could keep a protective stop just below that buy level, that would be one way to do it, but the issue that you’re going to have is this, trend lines, you can really draw it that way, something like that. So you could put a stop here, just a little under there, but then you’ve got also the 200-day moving average that might attract some buyers.

So what my suggestion would be is, hold tight right now, if the stock pulls back to $40.00, that’s when you go ahead and pull the trigger, set your stop wherever you want. If you really feel like you want to give it some room under the 200-day moving average, that’s fine. For me, I would set a real tight stop, if I’m stopped out, that’s okay, it doesn’t mean that I can’t buy the stock back, it just means that I’m stopped out, I’m flat, and now I look for a better entry.