Stratasys, Ltd. (NASDAQ: SSYS)

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Stratasys Ltd. engages in the manufacture and sale of 3D printers and materials that create prototypes and manufactured goods directly from 3D CAD files or other 3D content. Its 3D printers are based on patented fused deposition modeling (FDM) and PolyJet inkjet-based technologies. The company’s products include desktop and office 3D printers, and factory 3D production systems, which are used by manufacturers to create models and prototypes to aid in the new product design process. It also provides manufacturing tools through FDM technology, including metal forming, composite tooling, jigs and fixtures, thermoforming, and end use parts; and RedEye On Demand rapid prototyping and direct digital manufacturing service. The company’s products are used in the aerospace, defense, automotive, medical, business and industrial equipment, education, architecture, and consumer-product industries. It sells its products through a network of value added resellers and distributors worldwide.

To review Stratasys’s stock, please take a look at the 1-year chart of CP (Stratasys, Ltd.) below with my added notations:

1-year chart of CP (Stratasys, Ltd.)

SSYS has been in a steady trend higher since April. Along the way, SSYS has formed a nice trendline of support (blue). Always remember that any (2) points can start a trendline, but it’s the 3rd test and beyond that confirm its importance. Obviously SSYS’ trendline is very important to the stock since it has been tested on multiple occasions.

You will notice that the farthest that SSYS has risen from its trendline was back in August (red). At that point the stock was almost 30% above the trendline. SSYS is now about 30% above its trendline again, which could mean a pullback is in the offing.

The Tale of the Tape: SSYS has created a nice trendline of support over the last (8) months. A long position could be entered on a pullback to that trendline, which is approaching $65, but the trendline will be much higher than that by the time the stock pulls back down to it. A short position could also be entered if SSYS were to break the trend line support.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!

Good luck!

Christian Tharp, CMT