SSYS Stock: Is Stratasys Stock Setting Up to Make a Move?

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SSYS Stock: Still Waiting for Bullish Signals

Buying low and selling high is what all investors seek to pursue when they initiate an investment strategy. The most opportune time to get into an investment is after it has bottomed and is about to embark on a move toward higher stock prices.

I have been bottom fishing for Stratasys Ltd (NASDAQ:SSYS) stock for quite a while. I continue to wait for the required signal that higher SSYS stock prices are ready to prevail.

I began this bottom fishing adventure after SSYS stock suffered a 90% decline from its peak. The reason why is that most bear markets run their course after such a devastating loss has been inflicted, essentially setting the stage for higher prices to come.

After the decline in SSYS stock had run its course, a very influential momentum indicator had generated a bullish signal, reinforcing the notion that a long-term bottom was finally in place.

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This influential momentum indicator is highlighted on the following Stratasys stock chart.

Chart courtesy of StockCharts.com

The focus on the SSYS stock chart above is the moving average convergence/divergence (MACD) indicator located in the lower panel.

MACD is a simple, yet effective, trend-following momentum indicator that uses the crossing of a signal line to determine if bullish or bearish momentum is influencing the price action in a stock.

Bullish momentum implies that a stock is geared toward higher prices. Bearish momentum implies that a stock is geared toward lower prices. Momentum is a very powerful force, which is why a stock cannot sustain a move in either direction unless the applicable level of momentum is supporting it.

This is why it has not been a mere coincidence that the MACD indicator has been very effective in determining whether Stratasys stock is likely to sustain a move toward higher or lower prices.

For example, in April 2013, a bullish MACD cross was generated, indicating that bullish momentum was creating a path of least resistance geared toward higher prices. This bullish MACD signal effectively confirmed that a bull market was in development.

In April 2014, a bearish MACD cross was generated, indicating that bearish momentum was creating a path of least resistance geared toward lower prices. The bearish MACD signal effectively confirmed that a bear market was in development.

This is why, in July 2016, when a bullish MACD cross was generated, I had the inclination to believe that SSYS had put in a bottom and that a bull market had begun its development.

The problem is that SSYS stock has yet to sustain a move toward higher prices. However, as long as the MACD indicator remains in bullish alignment, I will continue to believe that such a development is on the horizon.

I firmly believe that a move toward higher stock prices will begin when Stratasys stock breaks above a significant level of price resistance. This level is highlighted on the following SSYS stock chart.

Chart courtesy of StockCharts.com

The technical price pattern highlighted the SSYS price chart is a potential rectangle bottom.

Rectangle price patterns are created when a static level of price resistance and a static level of price support contain the stock price from sustaining a move in either direction. On the Stratasys stock chart, price support resides at $17.00, while price resistance resides at $30.00. These price points were used to capture the technical price pattern using two horizontal trend lines.

In order to complete this potential reversal pattern, Stratasys stock needs to sustain a close above $30.00. Once this event occurs, I will firmly believe that higher prices will follow.

A test of resistance may soon be on the horizon, especially if the technical price pattern highlighted on the following Stratasys stock chart is resolved in a bullish manner.

Chart courtesy of StockCharts.com

The technical price pattern captured on SSYS price chart is a descending channel.

A descending channel is characterized by price action that contains a series of lower lows and lower highs, which is the quintessential characteristic that defines a bearish trend.

I captured this bearish trend using two parallel downward-sloping trend lines. These trend lines are important because they identify where price resistance and price support reside. In order to negate the bearish implications suggested by this pattern, SSYS stock needs to break above price resistance, which currently resides at $22.00.

The reason why I am focusing on the price pattern developing inside the rectangle price pattern is because I believe that once this pattern is resolved in a bullish manner, a move toward higher prices will follow. This would put the next level of price resistance (at $30.00) to a test.

Analyst Take

I continue to believe that Stratasys stock is setting up to make a move toward higher stock prices. There are a number of technical indications already suggesting that a long-standing bottom has been formed, but in order to suggest that higher prices are in development, SSYS stock needs to break above $30.00.