Everyone loved the 3-D printing stocks when they were at their all time highs (just months ago). Now, everyone hates them when they are at their 52 week lows. I am a contrary trader, and anytime it is a hated sector, I take a closer look and usually buy. 3-D printing stocks have put in a near term bottom according to the charts and price action. After ugly earnings from 3D Systems Corporation (NYSE:DDD) yesterday morning, the stock reversed a majority of the steep losses and is jumping higher today. 3D Systems Corporation is likely setting up for a bigger bounce in the coming weeks.
Stocks like ExOne Co (NASDAQ:XONE), Voxeljet AG (NYSE:VJET), along with 3D Systems Corporation (NYSE:DDD) have all fallen around 50% from their all time highs in early 2014. This steep decline has punished buyers that bought the hype but has rewarded shorts that saw the bubble. Now, it appears the tides may be changing. With the market flat on the day, these 3D printing stocks are showing strong signs of life. The charts are all into significant support and near term, extremely oversold. It would not be a far fetched guess to think that the 3D printing stocks like 3D Systems Corporation could bounce 10-20% in the next month or two.
3D Systems Corp. showing a reversal today off its earnings drop yesterday is a very significant indicator. This stock is a profitable company and very few will disagree with the long term view of these companies dominating manufacturing in the future. While not in any of these stocks at this time, I am looking closely for a potential entry in the near future. Take the seven day free trial to the Research Center and get swing trade alerts with entry and exit points. In addition, daily videos are provided, along with live broadcasts where you can talk to pro traders and see their charts live. Join today and profit for life. To see the audited track record of calls from the Research Center click here.
Chief Market Strategist
As you all know, earnings season is underway. There have been many leading stocks that have come under severe selling pressure after reporting earnings. The leading restaurant stock Chipotle Mexican Grill, Inc. (CMG) is one of the market leading stocks that sold off after reporting earnings. In fact, the stock topped out on March 21, 2014 at $622.90 a share. Today, CMG stocks is trading around the $490.00 level. Recently, the company cited higher food prices as a problem. Chipotle Mexican Grill Inc uses non-GMO (Genetically modified food) foods in most of its food items for sale and these food products are certainly more expensive.
Traders should note that CMG stock is oversold on the daily chart. This tells us that bounces could occur at anytime in the near term, but the daily chart trend remains down and lower stock prices are very likely. Traders should watch the $449.00 level as major daily chart support. This is an area where CMG stock should be supported by the institutional money and possibly be a solid bottom.
Today is the much anticipated FOMC rate decision. It is expected that the Fed will keep rates where they have been for the last few years. The only real change we will be looking for is to see if the taper continues. It is expected that another $10 billion of tapering will come off, bringing the bond purchase program to $45 billion per month.
Our only real concern is how the market will react from the statement. The last meeting Janet Yellen hinted at a possible rate increase 6 months after the taper was complete. This caught the market off guard and produced some market gyrations. There will not be a press conference this time around, with just a statement being released at 2pm EST. Fed meetings can often provide some good trading opportunities, both intra-day and for swing trading.
Below is a chart going back over the past 12 months. I have drawn white vertical lines indicating the days of previous Fed meetings. Some meetings have marked short term lows, while others have marked highs. What will come from today’s meeting? Stay tuned.
Elite Round Table, Pro Trader
The Federal Reserve will release their policy statement tomorrow at 2PM ET. The big question is, what will they say and how will the markets react? Over the last few days, the markets have rallied higher on hopes that the Federal Reserve will take a more dovish position on cutting quantitative easing. Below are the various options and how the markets will react.
1. The Federal Reserve will cut another $10 billion from their quantitative easing program which currently sits at $55 billion a month. The Federal Reserve will strengthen their language about cutting back on their print money policies and discuss raising interest rates in one year. This was briefly mentioned by Janet Yellen over a month ago and the markets sold sharply. Should this scenario happen, expect the markets to sell hard.
2. The Federal Reserve will cut another $10 billion from their quantitative easing program, which currently sits at $55 billion a month. Their verbage will stay the same with medium dovish chatter. The markets would see neutral to minor selling if this is the result, essentially, negating the buying pressure seen over the last few days.
3. The Federal Reserve will cut another $10 billion from their quantitative easing program which currently sits at $55 billion a month. Their statement will contain new dovish language which will show they are willing to bail the market out if any new issues arise. The market would love this option and rally higher.
4. The Federal Reserve cuts less than $10 billion from their quantitative easing program which currently sits at $55 billion a month. This would shock the markets. Additionally, they make very dovish comments. This would initially spike the markets sharply higher but then leading to selling. Questions would be raised on how strong the economy really is and whether or not the Federal Reserve knows something the rest of the market does not.
5. The Federal Reserve does not cut another $10 billion, instead leaving their printing presses producing $55 billion a month. Their language becomes super dovish. This would initially spike the markets but then send the markets into a panic mode on fear about a new recession.
Overall, the likely scenario is number two or three. The Federal Reserve will likely continue to cut back on quantitative easing at a $10 billion per meeting clip. Lately, the economic reports are showing slight growth and no change from any other recent meeting. Is it possible they say a few more dovish comments? Sure. Considering the issues with Russia and China it is possible. Either way, the most likely reaction would be a small sell off or small rally on their statement.
Chief Market Strategist
This morning, many of the leading retail stocks are trading flat to slightly lower despite the rally in the major stock indexes. Leading retail equities such as Dollar Tree, Inc. (DLTR), Target Corp. (TGT), The Home Depot, Inc. (HD), and Bed Bath & Beyond Inc. (BBBY) are all trading lower on the trading session. It is important to note that the U.S. consumer accounts for roughly 70.0 percent of the gross domestic product (GDP) in the United States. The U.S. consumer has recently been hurt by high oil, and gasoline prices which act as a direct tax on consumer spending.
Traders and investors that want to track the entire retail sector can follow the Market Vectors Retail ETF (RTH). Today, the RTH is trading lower by 0.13 cents to $58.47 a share. Traders should note that the RTH has near term daily chart support around the $57.00, and $55.25 levels.
The Housing stocks were the hottest place to invest from 2002 until 2007. What most investors don’t realize is that housing stocks topped out in July 2005 and even with the record Bull run of the past 5 years have not come close to those all time highs. When a sector goes parabolic and crashes like housing did, it takes a long time for investors to want to return to that area of the market again.
After having a solid run from the Fall of 2011 until March of this year, Toll Brothers Inc (NYSE:TOL) has retreated nicely. A level with multiple factors where Traders can get involved on the Long side would be $29.78.
Come and Trade with the Elite Round Table at www.inthemoneystocks.com
Elite Round Table, Pro Trader
It is a natural feeling to desire returning to a place we once visited, and loved. This same characteristic can be noted in stocks, as they often return to levels at which they once were. Take note of the JetBlue Airways Corporation (NASDAQ:JBLU) chart below. There you will see the exact level JBLU loves to visit, touch down, and take off from. If, JBLU, reaches the $7.05 to $7.20 area this week, a flight higher from this area should be expected. Keep a close eye on this level as it will present a great trading opportunity.
As always, if you can combine this level with other supporting factors, you will only increase your odds of profiting from this trade. Join me and six other Pro Traders at, The Elite Round Table, to find out the key levels we are trading and the proprietary techniques that keep the odds in our favor when trading for profit.
Elite Round Table, Pro Trader