by Serge Berger | January 15, 2014 11:25 am
Heads up! 3D printing stocks are back trading in a nutty volatile fashion.
That’s because earnings season for the 3D printing companies is slowly approaching, which means earning updates/warnings are in the offing. Early Tuesday morning it was Stratasys (SSYS) that released updated fiscal year 2014 guidance, which came in above Street estimates on the revenue side, but below earnings expectations.
As a result, shares of SSYS dropped as much as 13% intraday, but reversed notably, closing the day lower by a little more than 8%. The reversal off the lows also lifted rival 3D printing stocks off their bottoms, with similar moves seen in shares of 3D Systems (DDD) and ExOne (XONE).
In what was a rather strange trading session, it felt as if traders only focused on the earnings side of the SSYS guidance, and entirely ignored the upward guidance in revenue (until later in the day).
After the close of trading, XONE issued a sales outlook for its 2013 fiscal year that shook 3D printing stocks even further. ExOne now sees 2013 revenues coming in a range of $40 million to $42 million — well below the $48 million the company previously estimated. This led to a big selloff in XONE stock this morning, as well as modest declines in DDD stock and Voxeljet (VJET).
Since my mid-December update on the state of 3D printing stocks, where I discussed the divergence within the group and the upside potential in 3D Systems, DDD stock has reached my upside target and then some. After the newfound volatility over the past two days, I still like DDD the best out of the group, although SSYS has arrived at good initial technical support.
Here are some thoughts on the updated charts:
With Tuesday’s drop, SSYS stock sliced through its 50-day simple moving average (yellow) but held the 100-day (blue), leaving a long tail behind on the daily chart. The 100-day moving average has held as support since June 2013, and any follow-through buying after Tuesday’s intraday bounce off the lows would confirm the lows and lead another rally.
3D Systems (DDD) looks similar to SSYS in that it left a long tail Tuesday and needs follow-through buying to confirm the intraday low. DDD stock also fell out of a tight consolidation area at the highs, and I would like to see it climb back to this consolidation zone before considering the stock from the long side again.
Last but not least, XONE, after today’s down-gap — the second one in as many days — landed at a support confluence zone made up of its 50-, 100- and 200-day moving averages. The stock also needs to prove itself and show some commitment to the bounce that we are seeing so far today. A move back above $58.30 could give it some better footing for an upswing.
Bottom line: 3D printing stocks are not for the faint of heart, but if one maps out some well-defined technical levels as reference levels, much of the guess work and emotional aspect can be left out, and good probability trades can be executed on.
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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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