MTLS Stock: A Complete Disregard for Market Selling Pressure
Keeping one’s cool in this stock market environment has not been an easy task. This is especially true, given the recent bouts of volatility and the disappointing December that investors had to endure.
To put things into perspective how rough things have been, December (which is seasonally a good-performing month) was down this year.
Not only was it down, but it was also the worst-performing month of 2018 for stocks. If that wasn’t bad enough, December broke records by being the worst December in history! Talk about adding insult to injury and ending the year on the wrong foot!
That was the bad news. The good news is that a new year has begun and, thus far, the selling has dissipated and higher stock prices have prevailed. Sticking with the theme that involves a positive outlook, there is something good associated with widespread selling pressure: it makes it a lot easier to spot standout stocks.
For instance, a stock that completely disregarded the selling pressure in December was Materialise NV (NASDAQ:MTLS). This 3D-printing company managed to forge a new all-time high in December, closing higher by almost 42.3% on the month.
In order to accomplish this feat, MTLS stock needed to break above a significant level of price resistance.
This level of price resistance I am referring to is highlighted on the following Materialise stock chart.
Chart courtesy of StockCharts.com
The stock chart above captures a technical price pattern known as a price channel.
A price channel is created when a significant level of price support and a significant level of price resistance contain a stock within a range. As a result, the stock ends up oscillating between these two price points.
The price channel captured on the Materialise stock chart above had a significant level of price resistance that resided at $16.00, and a significant level of price support that resided at $11.25.
These price points prevented this stock from sustaining a move in either direction for over a year-and-a-half. In December, resistance finally gave way and, since then, higher stock prices have prevailed.
The good news that accompanied this break above resistance is that MTLS stock also ended up completing a large technical price pattern. The pattern I am referring to is captured on the following chart.
Chart courtesy of StockCharts.com
The technical price pattern highlighted on the Materialise stock chart above is known as a cup and handle.
Cup and handle price patterns are characterized by two distinct troughs, wherein the first trough is always much larger than the second.
These troughs depict a teacup image, which is where the name “cup and handle” derives from. These troughs are created when a significant level of price resistance prevents the stock price from moving beyond it.
In this case, the level of price resistance responsible for creating the cup and handle price pattern depicted on the chart above resided at $16.00. This is the same level of price resistance that created the price channel. The reason for this is that the price channel was actually the “handle” in the grand scheme of things.
The completion of the cup and handle price pattern is suggesting that higher prices are likely to follow.
The pattern was also kind enough to provide a price objective of $25.00. This objective was formulated by taking the depth of the cup and extrapolating that value above the level of price resistance that was responsible for creating the price pattern in the first place.
From current levels, this formulated price objective suggests that MTLS stock can still appreciate by another 16.3%. This is not exactly a home run, but we must take into account that this stock is also forging new all-time highs.
A stock forging new all-time highs is very significant because it is uncharted territory. Without any overhead resistance to contain the stock price from advancing, it is free to appreciate.
Under these conditions, there is no telling how high the Materialise stock price can travel. Ultimately, the sky becomes the limit.
Materialise stock broke out of a very large technical price pattern in December. That event continues to suggest that this stock is poised for further gains.
In fact, I would not be the least bit surprised if MTLS stock shot past the $25.00 price objective on its way toward much higher prices.
As long as the stock price does not fall back with the technical price pattern, a bullish view on this stock is warranted.