The Federal Reserve is continuing to help Wall Street print money with its latest FOMC decision. But for investors, one forgotten name represents a much better opportunity than most. If you’re looking to make some coin going forward, just check out the the charts and options of 3D printing outfit 3D Systems (DDD).
I can’t promise the red ink at 3D Systems or in DDD stock’s performance has altogether dried up following the company’s most recent earnings disappointment and surprise loss back in August. By and large, Wall Street remains skeptical.
Most recently, analysts from Pacific Crest discussed 3D Systems’ printing technology as being too expensive. DDD stock and 3D Systems also faces competitive threats from both peers and new disruptive and innovative technologies which can’t be ignored.
Nonetheless, fresh initiatives and refocus announced by 3D Systems management during its August mea culpa and a very compelling long-term, price chart for DDD make the case for some opportune positioning for an anticipated bottom.
DDD Stock Monthly Chart
The good news for bulls is that the price swing lower in DDD stock appears to be completing. Our technical assessment is two-fold.
First, over the past couple of months, 3D Systems has completed what’s sometimes referred to as a “mirror move” or “two-step” price reversal pattern by Fibonacci practitioners. In our chart of DDD stock, the formation completes at “D” as the down leg of “C-D” has declined by the identical or “mirror” dollar amount of leg “A-B” following a smaller counter-trend rally of “B-C.”
Second, the Fibonacci-based mirror move in DDD stock has pushed slightly lower than point D forming a doji candlestick on top of DDD’s 200-month simple moving average. The doji reflects indecisiveness on the part of bears and bulls as shares fail to go anywhere for the period after producing larger up and down price action for the month.
Coupled with the current three weeks of tight, inside price activity in DDD stock, the interpretation is very bullish. In our view, bears have exhausted themselves at a pivotal congestion area formed in 2011 which held above prior, key lateral resistance that defined 3D System’s massive breakout in late 2010.
DDD Stock Long Call Strategy
Implieds and DDD stock volatility have dropped the past few weeks back into the middle of their trading range and are priced similarly. Both features are good for buyers as they’re less prone to paying too much for an outright call purchase.
Admittedly, DDD stock’s bullish price moves have been much less frequent and unsustainable the past couple years. But when shares do fetch a bid, the price action has produced fast and strong gains for savvy and proactive traders.
Another benefit of the February $15 call is that expiration is still more than five months away. Should one of 3D System’s bullish or short-covering price spikes occur once more and sometime in the next couple months, the February $15 call could double in price with a move in DDD stock above $14.50.
A move in DDD stock to that price range would place the February $15 call squarely at-the-money. But because the price action would be printing money hand-over-fist for this type of stock bull, the trader would already be very much “in-the-money” and able to take profits or make great adjustments moving forward.
The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. Mr. Tyler currently holds no positions in any of the securities discussed in his personal or managed family accounts but may initiate, for better or worse, a position in two or more business days following the publication of this article.
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