SSYS stock: Bullish Signals
The equity markets and stocks gyrate just like a roller coaster ride, climbing slowly to new heights and then dropping with great speeds after the trend peaks. This process brings out the raw emotions of fear and greed. Both of these are powerful emotions that sway investment decisions.
Stratasys, Ltd. (NASDAQ:SSYS) stock is perfect example of greed moving a stock to great heights, only to have it fall just as quickly as fear, including the fear of further losses, has caused this stock to completely crater.
In October 2011, SSYS stock hit a low of $17.88 before the stock went on a massive run fueled by speculation around 3D printing, and how this new revolutionary technology will change the world as we know it. There is no arguing this premise; its just that investors got a little greedy and managed to drive the share price to a high of $138.10 in January 2014.
Greed quickly turned into something more sinister and, in a matter of two years, all the gains were completely wiped out by fear. By February 2016, SSYS stock hit a low of $14.88, having gone full circle, and then some.
The markets move in cycles of fear and greed, and I believe that the cycle of fear surrounding Stratasys stock has now come to a conclusion, and that a new cycle of greed surrounding Stratasys stock has begun. My bullishness is based on the SSYS stock chart, and the signals that support my view are presented below.
The following Stratasys stock chart illustrates a signal that is instrumental in confirming the trend.
Chart courtesy of StockCharts.com
The chart above illustrates the magnitude of the pricing action in SSYS stock. Stratasys stock is a trending stock for sure, as it seems to only move up or down. Sideways movements are not a character trait that this name has been able to acquire as of yet.
These trends were captured quite effectively using the moving average convergence divergence (MACD) indicator (labeled on the bottom of the chart above). MACD is a simple and effective trend-following momentum indicator. Signal line crossings are used to distinguish between bullish and bearish signals.
In May 2014, this signal warned that the momentum had swung to bearish, and indicated that the bears were now in control of this investment. Shares of Stratasys stock cratered shortly after this signal was generated
This same signal crossed in a bullish manner in July 2016, indicating once again that bullish momentum is dominating, and that the bulls are in control. I am expecting bullish price action to proceed this signal.
The chart above is using a monthly scale, and this serves to smooth the trend and, as a result, fewer signals are generated and this gives me a trading bias from a long-term perspective.
The following Stratasys stock chart illustrates the recent trading action that supports my bullish bias.
Chart courtesy of StockCharts.com
In February 2016, SSYS stock surged $15.00 higher in a matter of only a few weeks. This type of price action is known as an impulse wave. Bull markets contain impulse waves that surge higher in price, and bear markets contain impulse waves that surge lower in price. These impulse waves give way to consolidation waves. Consolidation waves consist of sideways trading action, and once this pattern is completed, a new impulse wave can develop. This is the structure of most bull market trends.
On average, impulse waves have matching characteristics in length and duration. The first impulse wave is $15.00 in length, thus the next wave higher will be targeting a price of $34.00, using the lowest point within the rounded bottom consolidation wave.
SSYS stock is on the verge of generating a golden cross. A golden cross is a bullish signal that is produced when a faster 50-day moving average (highlighted in blue) crosses above a slower 200-day moving average (highlighted in red). This signal would be instrumental, adding one more indicator that is confirming that a new bullish trend has developed. It is not uncommon for the trend to accelerate after such a signal, and it would provide the fuel needed to create the next wave higher.
The Bottom Line on Stratasys Stock
I am bullish on SSYS stock and I believe that the bear market that took the shares down from the peak at $138.10 has now gone back into hibernation, and that the new bull market has been born in its place. My bias on Stratasys stock is based on the price chart, and my bias will remain bullish as long as the signals generated from the chart support my view.