Sierra Wireless (SWIR) has been in a steep decline for a long time now. The stock has been unable to sustain rallies for very long ever since it peaked at around $80 back in 2000, and it's trading at around $13 a share these days.
This monthly bar chart illustrates Sierra's trend pretty well:
The market seemed certain that the stock's dog days were behind it when SWIR hit its most significant recent high of $50 a share in late 2014, but investors were disappointed when the shares reversed yet again.
Sierra ultimately hit what looks like a near-term bottom of around $10 last month, which begs the question: "Has the stock put a final low in place?"
To answer that, let's look at SWIR's daily bar chart, which shows a usable degree of trend for most investors:
What we see in this chart is that SWIR's recent rise is showing "impulsive" characteristics that should be perfected once the price bars finish dipping into the green box above at around $12.25 a share (plus or minus 75 cents).
That should be followed by a rise along the blue arrow in the center of the chart. Assuming that happens, a buying opportunity should arrive once Sierra makes a corrective decline back down to the right side of the green box above.
From that zone of about $11.50 to $13 a share, I foresee SWIR roughly doubling its price along the blue arrow to better than $24 a share. But for safety's sake, I'd suggest that those who buy the stock when it enters the green box should also use a $10.25 protective sell-stop.
The Bottom Line
Sierra shares are setting up what looks like their best buying opportunity since at least the stock's late-2011 low (if not its 2009 bottom).
Taking a long position and using a sell-stop for protection should offer a low-risk/high-reward play of about $2.50 a share in risk for $12.50 a share in potential reward. That's a 6-to-1 ratio in favor of buyers -- an asymmetrical skewing of risk vs. reward that's pretty hard to come by.