When you hear the term bullish and 3D printer in the same sentence, you know it has to be technical. Most traders are familiar with 3D Systems (DDD) but there are other names in this group, and the one that has my interest is ExOne (XONE) and its 41% short interest. It can be tough to fight this size of short interest, so one must be disciplined with stops. Fortunately, the daily chart on XONE not only gives us a very clear stop on the downside, but a nice-looking price breakout to the upside.
While price lows have descended since February, this is still very close to a double bottom with a stop under the lows as the key. The low sits right around $13.40 and I will be willing to give this one until $13.25 for a stop. The lower lows have not been matched by trend nor momentum, though. There are bullish divergences in the relative strength index (RSI), slow stochastics and commodity channel index (CCI). I added the CCI because it does a good job of demonstrating extremes moves within the trend. Extreme moves are generally around -200 or +200. I often like to fade the extreme move, but with CCI, note XONE's extreme negative moves haven't seen much of a bounce, which is why I like the stock. Even while slowly pushing lower, there has been no extreme move in the CCI. The last extreme move was near the current low in price.
Price just isn't about support. Note the move higher today is pushing over recent downtrend resistance. This resistance should become new support. The move is early, even if it did just bounce a dollar. The RSI is now bullish along with CCI and slow stochastics, so not only do we see bullish divergences in terms of higher lows in all three indicators, but all three are now bullish. This has the potential to quickly move to $15.50 and possibly all the way to $17 on a squeeze of the absolutely huge short interest.
DDD has a similar setup but I have a few concerns that make it a little less appealing than XONE. Price is running into resistance with the CCI hitting extremes on the up side. In the past, this has been a resistance point for the stock. A close above $29 would at least get above price resistance, but buying DDD is anticipating a breakout while buying XONE is buying the breakout already triggered. I believe if XONE goes, DDD will go as well, but my preference is to go with the name with the better setup in the secondary indicators and price breakout in place.
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