These is no arguing that hindsight is 20/20, and I am sure we have all had our moments where we wished we possessed some sort of device that would allow us to turn back time and purchase an investment before a wealth-defining run was about to begin. We know they exist because history has been kind enough to provide us with impeccable examples of such exact instances. Many of these instances share a common characteristic.
Simply put, it’s always the best practice to purchase an investment after a bear market has concluded. Buying low and selling high is a method of making money, but buying at the conclusion of a bear market creates a lifetime opportunity that can often change the state of your financial affairs forever. This is something we can only dream of doing, since going back in time is not an available option. So let’s not focus on the past and instead look for opportunities in the present.
That being said, I have the inclination to believe that Stratasys, Ltd. (NASDAQ:SSYS) stock is going to be one those once-in-a-lifetime investments that will make you wish you could turn back time and take that stake in SSYS stock. This is a very bold statement to make, so be aware that there are contingencies to this view.
Most bear markets that follow a bubble terminate after the investment proceeds lose 90% of its value from peak to trough. Stratasys stock lost 89.22% of its value from peak to trough, and this loss was the result of a crippling bear market that was created in the aftermath of bursting bubble. Valuation levels reached excessive heights, and just as the price overshot to the upside, the same tendency applies to the downside. The 90% loss criterion has been met, so there is reason to look for a trend reversal.
A trend reversal is confirmed when a multitude of indications support the notion that the stock has changed directions.
On March 22, 2017, I published a report titled “A Bottom in Stratasys (SSYS) Stock Is Finally in Place.” This report outlined a number of factors that were suggesting that a bottom was in place and that higher stock prices were likely to follow. My analysis of these factors was spot on, and the performance alone was a testament to my level of proficiency, because SSYS stock proceeded to surge by 33.56% in the four weeks that followed.
This surge in price was quick, and it has since backed off the highs that were created. The level that turned price away is very significant, and it should be marked as a very important level of price resistance. Breaching this level of price resistance will add another bullish indication that will reinforce the notion that a new bull market is now in the making.
The following Stratasys stock chart illustrates the new dynamic that was created with the most recent surge in price.
Chart courtesy of StockCharts.com
The price chart above is simply an incredible technical setup pattern that will define the exact point where another bullish indication will support the notion that this investment is once again on a bullish track. This bullish track is so young in its bullish life cycle, that the previous all-time high looks like an unscalable mountain.
The pattern that is depicted on the SSYS stock chart is a “rectangular bottom.” This pattern is named after the picture it depicts on the price chart. This technical price pattern is created using two horizontal trend lines, where one level defines support and the other level defines resistance. What sets this pattern apart is that when it acts as a reversal pattern, the ramifications are magnified. These ramifications are similar for all reversal patterns, as this family of indications produces the best and most powerful results.
In order to complete this reversal pattern, Stratasys stock needs to close above $31.00. This is the same level that halted the precious advance.
The completion of this pattern will be the second technical indication in recent months to suggest that Stratasys stock is set to appreciate. Two indications suggesting the same view is the equivalent of having two hands on an object. Two hands have quite the grip, and this suggests the bulls are firmly in control of this investment and that higher prices can be expected to follow.
The completion of the reversal pattern would suggest that SSYS stock was on a trek to scale a mountain peak that was set in December 2013 at $138.10. Let me reiterate that until I get this indication, I will try my best not to get too excited.
Bottom Line on SSYS Stock
I believe Stratasys stock is in a position where a defining moment will confirm that this investment is within the grips of a well-defined bull market. This indication would suggest that a generational bottom has formed in SSYS stock, and in hindsight, it may be looked upon as an opportunity of a lifetime.