Last November, at a price of $80 a share, I wrote an article for Seeking Alpha saying 3D Systems (DDD) had entered an extremely overbought state which could only end in a significant share price correction.
Although the share price proceeded to fall around 13% after I made the claim, 3D Systems ended up going higher by another $17 before the bubble finally popped.
Since then, 3D Systems has lost nearly 50%, hitting a low of $44.80 in April of this year.
Now that the sharp price fall has taken place, there is very little value left for shorts, and the next direction for DDD shares is likely to be up following a potential short squeeze.
Last week’s Bank of America Merrill Lynch Global Technology Conference highlighted some of the reasons why 3D Systems could still be the stock of the future.
For me, the potential partnerships that DDD alluded to in last week’s conference form the most exciting part of the story.
3D Systems spoke of opportunities in food printing with Hershey (HSY).
In mobile, 3D Systems is working with Intel (INTC), whose mobile 3-D printing chip, RealSense, has just been launched.
While, potential agreements with Google (GOOG, GOOGL) could be even more exciting.
It’s also possible that a tipping point for 3D printing products could be reached within a couple of years. A scenario that could see 3D printing products in the average American household.
Time to buy 3D Systems? Technical outlook
While the future will no doubt be good for 3-D printing, technical outlook forms a big part of any analysis on 3D Systems too, principally because the market has been subject to such intense speculation.
Today, 3D Systems trades almost 50% lower, and short sellers (unless unreservedly greedy) will almost certainly be closing out their positions at these prices.
$56.64 is the level to watch, and a break of this would surely see all remaining shorts exit their trades.
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