by Serge Berger | December 18, 2013 6:30 am
3D printing stocks have seen great rallies this year, but they began to show divergence within the group in the second half of the year, which is still playing out to this day. As these divergences are getting more pronounced, late last week I noticed a great pattern playing out in 3D Systems (DDD), which could lead to higher prices again in the near future.
Some DDD stock competitors, such as Proto Labs (PRLB) and ExOne (XONE) have seen a volatile period in recent months, while others like Stratasys (SSYS) continue to look solid on the long side as well, thus painting a picture of intra-group divergences.
From a trading perspective, arguably one could consider pair trades given these divergences. For me, at the current stage in the markets, I prefer just looking directionally at some of these stocks.
Let’s start the analysis with a multi-year chart of DDD stock. From the 2011 lows around $9 up to this year’s highs in November, it has rallied around 820%. Although the stock’s slope has constantly steepened over the years, it has had offered plenty of consolidation periods, each of which allowed the stock to re-build some energy for another push higher.
Through this lens, DDD stock has great momentum, making it a trend-followers’ favorite and one that is simply difficult to fight until a better topping process develops, which is still missing.
On the daily time-frames, note how DDD stock shows great respect for both the 8 (blue) and 21 day (yellow) simple moving averages, the latter of which most recently has held as support since late October. Note that each time DDD stock touched these two moving averages in recent weeks, it bounced and left bullish candles behind, showing us that buyers are aplenty.
Over the past three days, DDD stock has been churning just below lateral resistance and showing some indecision candles — all of which looks to be setting the stock up for a good move higher, possibly toward the $90 area in coming weeks.
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Learn more about the strategies Serge Berger uses to create profits in the market every day. Download his trading plan in the Essence of Swing Trading e-book by clicking here. As of this writing, he did not hold a position in any of the aforementioned securities.
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