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Is It Time To Buy 3-D?

05/29/14 10:40:40 AM
by Koos van der Merwe

The 3-D printing sector has been under pressure since the start of 2014.

Security:   DDD, SSYS
Position:   Buy

With Hewlett-Packard announcing that it will be entering the 3-D printing market with a printer of its own, the 3-D printing sector has been under pressure. The fall in stock prices gave rise to the notion that speculators have left the sector. Share prices dropped alarmingly, as companies announced that they were reducing the cost of their printers. Year-to-date, 3-D Systems (DDD) and Stratasys (SSYS) have lost about 47% and 34% respectively, but prices appear to be stabilizing. Is it now time to buy the shares?

Figure 1. Daily chart of DDD showing a JM Internal Band buy.
Graphic provided by: AdvancedGET.
The chart in Figure 1 is a daily chart of 3D Systems (DDD) that shows how the share price topped out in a WAVE V at $97.31 on January 3, 2014 in an Elliott WAVE V. From that high it dropped in an ABC correction to a low of $43.64 by April 29, 2014. On May 21, 2014 when the share price broke above the upper JM Internal Band at $49.96, it suggested a buy. With the Elliott wave count suggesting that the share could now be rising in a WAVE I and with an RSI indicator trending upward, buying the share could be the correct thing to do. A JM Internal Band is a 15-period simple moving average offset by 2% positive and 2% negative. A move above the upper band suggests a buy signal.

Figure 2. Daily Chart of SSYS showing a JM Internal Band buy signal not yet given.
Graphic provided by: AdvancedGET.
The chart in Figure 2 is a daily chart of StrataSys Inc. (SSYS). The chart shows a JM Internal Band that at $93.71 has not given a buy signal. Any move above $93.71 will suggest a buy. The RSI indicator is confirming this.
With DDD and SSYS suggesting buy signals given the move above the JM Internal Band indicator, I would be a buyer of the share for a long-term hold watching the JM Internal Band for buy/sell signals.

Koos van der Merwe

Has been a technical analyst since 1969, and has worked as a futures and options trader with First Financial Futures in Johannesburg, South Africa.

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