Crude Oil

In 2008, crude oil crashed from $140 per barrel to $40, or about 65% below its 200DMA. The price today is only 40% below its 200DMA. There is still a possibility that crude oil will continue to fall.


The case of Nokia (NYSE: NOK)

The past year Nokia has been on a roll. After the announcement of a 7.2 billion dollar deal to acquire Nokia’s devices and services business by Microsoft, the PPS of the stock has went from a low of under $4 to doubling in just under a year. However, after peaking at $8.72, shares of NOK have been trading between the range of 7.58-8.50.

The stock current is at a BUY with a price target of 8.80. It is currently priced at 8.04, and as long as 7.60 holds, it will remain a buy. I believe that it is in a trade-able range until nearing the ER that is scheduled on jan 22, 2015. MACD,RSI, MAs all look good, just keep in mind to follow the FIB lines when trading this stock.

Why 3D Systems (NYSE: DDD) makes a good buy.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in DDD over the next 72 hours. 

3D printing stocks such as 3D Systems(DDD), ExOne(XONE), and Stratasys(SSYS) have all been under pressure this year. After the announcement of Hewlett-Packard’s plan of entering the 3D printing market, investors are concerned that Hewlett-Packard’s entry to the 3D printing market will shake up the current market leaders. However, I believe that 3D Systems will remain relevant in the 3D printing market if they manage their position well.

Founded in 1986 in Valencia, California, 3D Systems specializes in manufacturing 3D printers and printing materials. The company is the largest 3D printing company with revenues of 513 million in the year ended 2013. With 3 different product classes of 3D printers, personal, professional, and productions, 3D Systems currently enjoy most of the market share in addictive manufacturing. They also have different varieties of each class; printers that produce parts that are durable, or printers that produce parts that are more detailed and smooth. 3D Systems currently holds a commanding position in the addictive manufacturing, number one in the entire market.

Here are some key financial ratios:


Note that the most important ratios to a valuation of a stock is the company’s:

  1. Price-to-Earnings Ratio (P/E ratio)
  2. Price-to-Book Ratio (P/B ratio)
  3. Debt-Equity Ratio
  4. Net Margin
  5. Price-Earnings to growth ratio (PEG ratio)
  6. Revenue Growth rate

To over-simply this analysis, I will not go into the details: 3D Systems is doing better than their competitors.

Technical Analysis

The price history of DDD is a classic example of a head and shoulders pattern. However, I believe that it has bottomed out since it held the low of 27.46 and continued to make higher lows since reaching the low. In theory, the price will continue to rebound until it hits the resistance at around $41.

The 200 Smoothed Moving Average (SMMA) has always been a key resistance for the stock. In multiple instances, the price briefly touched the 200 SMMA before crashing even more. On Friday, December 26, 2014, the price once again tested the 200 SMMA on high volume. The price movement must be watched carefully because breaking the 200 SMMA coupled with high volume will confirm a bullish reversal from the stock’s poor performance this year.

Long position strategy for 3D Systems (NYSE: DDD)

3D System is currently priced at $32.96 per share, and I believe it has the potential to reach $41 before reaching any significant resistances. That makes a profit of $8.06 per share, or approx. 24.39% gain.

To lower risk, it is important to set a goal and create a stop loss.

If the price movement on Monday confirms a breakout of the 200 SMMA, I would definitely initiate a long position, and then I will set a stop loss at the support of 32.46 (confluence 16).

Note: This analysis has been oversimplified, there was much more research and analysis on the company than shown. Do your own due diligence!

The stock market is a no-called-strike game. You don’t have to swing at everything–you can wait for your pitch. The problem when you’re a money manager is that your fans keep yelling, ‘Swing, you bum!’

-Warren Buffett


Why utilize both technical indicator and fundamentals

In financial markets, traders use either technical analysis or fundamental analysis when purchasing a security. For a trader to utilize both schools of thought is uncommon; traders are either not well versed in the analysis methods or unable to do so due to time constraints. However, if a trader is able to master both technical analysis and fundamental analysis, risk can be minimized while profits be maximized. First, let’s get into the details on the difference of each of the methods of analysis.

 Fundamental Analysis

At it’s roots, fundamental analysis approaches a security by reviewing a company’s financial statements. By looking at the company’s balance sheet, income statement, cash flow, and retained earnings, a financial analyst will attempt give a company a valuation. Fundamental analysts often use financial ratios such as earnings per share(EPS), Price/Earnings ratio(P/E), and Profit Margin to provide insight on the company. In this approach of analysis, a company makes a good investment when the intrinsic value of the company is higher than the extrinsic value.

Technical Analysis

Unlike fundamental analysts, technical analysts find it unnecessary to review a company’s financial statements. Instead, technical analysts study the price movements in charts in order to predict its future price movements. Technical analysts believe that a company’s intrinsic value is already factored into the stock price.

Utilizing both analysis methods

Although many investors believe that the two traditional methods of analysis are complete opposites of each other, I believe that they both can co-exist in order to minimize risk and maximize profits. In my strategy, I first use fundamental analysis in order to determine a company’s intrinsic value. Then I utilize technical analysis to determine the best time to purchase the security. The main goal of investing is to buy low and sell high, so timing is extremely important. By utilizing both methods of analysis, I am able to purchase stocks in a strong company that is currently undervalued at the lowest possible price.

“Risk comes from not knowing what you’re doing.” – Warren Buffett