Is this pullback an opportunity to buy 3D Systems (DDD) on the cheap? Nope.
Discussed in this article: 3D Systems Corp. ( $DDD )
I want to look at 3D Systems ( NYSE:DDD ) here. This looks kind of ugly to me, that’s all I can say. This has been a weak stock; I know 3D printers and all that were quite the rage after this big breakout here. We went from like what, from the low 50’s clear up to almost 100.00. Well, what do you think pushed this up that high? Momentum traders, they’re the second to the last guys to the party, and they make a lot of money. The last guys to the party are those that don’t believe the momentum and they finally buy when it’s just so clear that what happened has already happened, so they buy at the top. We get a nasty sell-off here, nasty gap down on poor earnings, the stock closes the gap, but it finally prints a lower high; lower relative to this, definitely relative to the 50-day moving average, so this is resistance.
The stock rolls over; you don’t want to be long this stock. Well now where are we? The stocks at a bounce point here where you’d kind of expect it to bounce, right? But how much is it going to bounce if it does, and frankly I don’t think it will. We’ve got this downtrending line here; this is just simply not a stock that’s going to bounce a whole bunch. I’m already short this, I would suggest considering shorting it on a breakdown below this level. But really you kind of want to wait, hopefully you get a little oversold bounce from those that are looking at it here saying, “Oh, finally a buying opportunity just like we have back here.” Like I said, I don’t really think that’s going to happen, but if the stock does come up the further it comes the more of a gift it is to you to short.
Why am I saying that? I’m saying that because this party has already come and gone. You can go to Time Square on December 31st and have a heck of a time because everybody else is there and they’re all drinking way too much. But if you show up on January 3rd, you’re in the same spot, you’re in the same ticker, but there’s no party anymore. So keep that in mind as you’re looking at stocks like this that are obviously trading lower. The bottom line is, when the stock is trending lower like this, the second hit here is not a buying opportunity like this one. What it is, is one that you want to watch for the lower high, then you fire off that short, you can keep a tight buy stop, above your short area, somewhere here, and then you look to ride this stock down.
I think 3D ( NYSE:DDD ) goes lower. Those of you who are technically inclined have probably seen the obvious here, there’s the two shoulders, there’s the head, I don’t even know where you want to draw the neckline, I guess you’d almost have to draw it down there because that’s where the stock gapped to. So what, that’s your head and shoulder? I’m not so dogmatic about that, so I would basically say it’s here. Why? I don’t know, because it just looks like it is to me. So we’ve got a lot of resistance on this stock; there’s a lot of resistance here. If you’re long this stock, again, you may see an oversold bounce here; stochastics, momentum indicator sure indicate that we’re at an oversold level. What I’m saying is, you know what, if you’re long this stock you’re hoping, your hoping period, don’t hope.