Voxeljet (VJET) was one of the few IPOs I snatched up soon after its shares went public a couple of months ago. The company focuses on industrial 3-D printing, which is an area that has garnered a great deal of interest recently. My goal at the time was to catch some quick returns on the shorter time frames.
I was out of most of my shares when the stock began to exhibit trend exhaustion in mid-November after establishing three waves of buying on the daily time frame. It then had three smaller waves within the larger third leg as shown on the 90-minute chart below. Nevertheless, the German-based company remained on my radar due to the smooth trends it has had on the 90-minute and daily time frames, making it ideal for swing traders who hold a few days to a few weeks at a time.
As we head into next week, Voxeljet is once again at a pivotal price point on the 90 minute and daily time frames. After exhausting its uptrend in mid-November, Voxeljet's shares were hammered. Short interest soared and its stock price returned to the congestion zone that had developed days after its initial offering.
The first daily low on the selloff hit on November 21, followed by a second retest of the support on December 18. From a technical standpoint, Voxeljet's trend development has been nearly textbook perfect. After a strong bounce off the November 21 low, Voxeljet went in for a retest of lows, but at a more gradual pace. This second selloff consisted to two waves of selling on the 90 minute time frame into December 10, followed by an even more gradual third push lower into December 18. The slowing momentum into price support allowed Voxeljet to recover more than 10 points off last month's lows before striking daily resistance once again this week.
Here is where things get interesting again. The rally over the past several weeks has had two waves of upside. These are labeled A and B on the 90 minute time frame. These moves are nearly identical in terms of price and momentum. This indicates intraday exhaustion on the upswing as we head into the weekend.
Now, since this is also the second swing to the upside off the $35 zone lows since the November meltdown, it also indicates the potential that a break lower on the 90 minute charts can easily lead to another swing to the downside on the daily time frame as well.
However, the extreme move lower in mid-November, coupled with the larger price support and nature of IPOs themselves makes it likely that a daily breakdown attempt will lack strong momentum. Instead, there is a greater chance that such a move can actually create a stronger buying opportunity, particularly if a move lower on the daily time frame displays a great deal of price overlap from one day to the next and yet still manages to take out the December low. Should this scenario play out as shown on the daily chart, I would expect a trigger near the end of January or early February.
While the above scenario is a very common one given the current daily and intraday price development in Voxeljet, Thursday's volume has caught my attention. The volume was as high as it had been in the first week following the IPO and in early November when it broke through its first zone of daily congestion.
In the first buy scenario that would play out in a few weeks, volume typically remains on the lighter side during second daily rally (marked as B). Thursday's increase in volume suggests that Voxeljet may not follow this path and could instead begin to move once again to the upside without the additional daily pullback. However, this would be a bigger gamble for the shorter-term bulls. It would require more aggressive risk management due the increased risk of intraday bull traps whereby the stock may break out of a congestion zone on the 30-90 minute time frames, and then still pull back on the daily charts.
Although many argue that the glory days of 3-D printing stocks are behind us, I do not believe this to be the case. I am interested solely in the upside potential in Voxeljet at this point, whether than means a more aggressive stance now, or waiting for another opportunity later in the month. The overall industry is projected to grow 20 to 30% over the next five years and Voxeljet is well-positioned to take advantage of this growth.
One concern for fundamental investors is the fact that Voxeljet is currently trading at approximately 25x its 2014 anticipated sales. This does price it above many of its competition. Unlike many of its competitors, however, its printers can handle both metal and plastic printing. Most companies focus on one or the other.
For example, ExOne (XONE) is its primary competitor for metal casting, while 3D Systems (DDD) and Stratasys (SSYS) are its publicly traded competitors on the plastics side. This makes Voxeljet a candidate for a buyout by 3D Systems or Stratasys since both companies have been making fairly aggressive acquisitions to expand their product lines. As such, longer-term investors would benefit from the consolidation even though they may not see an immediate boost in share value if the company is indeed acquired.