DDD Stock: Still Bullish
I have stated previously that I am bullish on 3D printing companies, and 3D Systems Corporation (NYSE:DDD) is one that I favor. There has been a slight setback in the price of DDD stock, but the price action has done little to change my bias that was generated using the price chart.
I have been using price charts to analyze investments and generate trading strategies for over a decade. This process has been essential in defining my risk and minimizing my emotional biases. Even though I am a huge fan of 3D printing, I believe this technology is only in its infancy. The technology will eventually shape and change our futures in an efficient and timely way.
My current views have nothing to do with my emotions, however; they are completely and objectively based on the signals that I was able to pull off of the DDD stock chart.
The following 3D Systems stock chart illustrates what first piqued my interest in this investment.
Chart courtesy of StockCharts.com
The downtrend on the DDD stock chart above is clear and concise. This trend line is created by connecting the peaks of the price chart. A downtrend is defined by price action as the trend moves lower. All downtrends have a similar characteristic of lower lows and lower highs, and that is why trends appear as staircase patterns on a price chart. There is no mistaking an uptrend from a downtrend, as a downtrend can easily be identified as the price moves from the upper left to the lower right.
This downtrend was finally broken after 3D Systems stock broke above the trend line in September 2016. This event marks the end of the bear market that completely obliterated the price of DDD stock. It is hard to even believe that this investment hit a high of $97.28 and that, just two years later, it hit a low of $6.00. This is just another example of trends running beyond any rational fundamental valuation.
The recent pullback in the price is still bullish, in the context that it has only served to backtest the downtrend line. It is not uncommon for a price to trade back and test a previous level of resistance.
The following 3D systems stock chart illustrates other bullish trading signals that still reinforce my bias.
Chart courtesy of StockCharts.com
In April 2016, DDD stock generated a golden cross. This is a bullish signal that is produced when a 50-day moving average, highlighted in blue, crosses above a 200-day moving average, highlighted in red. This is a lagging indicator that traders use to confirm that a bull market is on the horizon. I always found it wise never to trade against the direction of this signal. As a result, I can only hold a long or neutral position in the face of this signal.
3D Systems stock is still trading above the 200-day moving average. This moving average is the dividing line between stocks trading in a bull market versus stocks trading in a bear market. When the share price is above the moving average, it is bullish; when the share price is below the moving average, it is bearish. It is not uncommon for support to be found at this level, as many traders will be eyeing it.
The signals that are illustrated above are suggesting that the tailwinds are still bullish, and that my bullish bias on 3D systems stock is still warranted.
The Bottom Line on 3D Systems Stock
I am still bullish on 3D Systems stock, despite the sell-off in price. My bias is based off of the signals generated on the price chart. My bias will remain bullish until a signal from the DDD stock chart warrants a change of view.