I was at a Barnes & Noble earlier today, and while I was checking out I saw the Rosetta Stone foreign language educational multimedia products on display behind the counter. The cashier said that they had been selling very well over the past week or two, especially with the school year winding down in the northeast and parents buying them for their children to study over the summer.
RST IPO’d back in April 2009, essentially at the birth of the current bull market. However, instead of following the rest of the tape higher over the past several years, Rosetta has became the quintessential laggard, trending lower for years on end with a clear pattern of lower highs and lower lows.
Recently, though, the stock put in a higher low last summer and is currently consolidating yet again, attempting to make a second meaningful higher low. Much like Groupon, Pandora, Zynga, and many other laughable post-IPO performances, Rosetta Stone is on watch for a major bearish-to-bullish reversal, just as everyone writes off both the stock and business model as destined for bankruptcy.
The first chart, below, is of the daily timeframe, where I am expecting the symmetrical triangle to morph into a larger pattern. It can fall down to around $15 and still put in a meaningful higher low, as the weekly timeframe on the second chart indicates. Beyond that, the stock is currently coming to terms with the all-important $17 level, which had been critical support back in 2010 before it eventually led to a washout lower when breached in 2011.
Also note that since RST has shown an inverse correlation to the broad market over the past few years, it may very well be a rare stock which “trades in its own world,” oblivious to what the market does this summer.
____________________________________
____________________________________
nice
Might be a Raul kind of play.
Looks intriguing, thanks for posting. I got a few shares at 17.