BullBear Trading: Stock and Financial Market Technical Analysis

3d Systems: Is the 3d Printing Leader a Buy Here?

One of the factors that might temper long term bullishness with regards to the current US equities market is that there currently appear to be no leading, dynamic economic growth sectors.  In the early stages of a secular bull market, however, the dynamic growth sectors that will lead the advance are often unclear or unknown.  The picture may be starting to clarify itself.  One area that appears poised to take off and add a dynamic growth component while reducing costs throughout the economy is 3d Printing.

Here's a quick technical take at the sector leader, 3D Systems:

This weekly chart shows that the company has been trending nicely and appears to be in a wave 2 of (3) correction.  That means that the next wave segment, 3 of (3), should be a very strong rally.

Recently the stock completed a 50% retracement of the rally off the 2011 bottom.  It found support at its 50 week EMA which coincided with important price action in August and November of 2012.

Channeling is a little sloppy and the lower green rail may not offer much support.  The next level at which a buy could be attempted (if the 50 EMA fails) is at the 61.8% Fibnonacci retracement and the blue support trendline.  The ideal entry point would be the confluence of the 2011 price highs with the 200 week EMA and the 78.6% Fibonacci retracement.

The stock does appear to participate in periods of general market weakness and so if we do see a market correction soon (which according to my current analysis is likely) then we could indeed see DDD break support and head to the lower targets.

There was a bit of company news last month and that appears to be already priced into the stock.  I don't get the sense that investors are taking this sector seriously as yet and it may be held by weak hands and fast money looking to turn over a growth stock.  If momentum cracks, they may sell first and ask questions later, providing long term investors with a nice, panic washout low to put on a position.

I'd like to see some fundamental due diligence on this stock and more on the sector as well before I committed any serious money, however.

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