Now that the overall market has entered a positive seasonal phase, two stocks pop up on our radar. Both stocks sit just above their 52-week lows and are up more than 4.5% in the last five days. They may be poised to make further gains.
The first is California-based 3-D printing company 3D Systems Corp. [DDD], which is due to report Q3 results after markets close on 8 November. Analysts expect the loss per share to come in at $0.09, versus a loss per share of $0.07 last quarter, according to data collected by Zacks Investment Research. Earnings per share (EPS) in Q3 last year were $0.08. In short, performance appears to have worsened.
But here’s the thing. If 3D Systems beats these low expectations, the stock could rally from its current level around $9.10, as shown in the chart below. One caveat to this is that exiting a position before an earnings report makes sense to control risk.
Also, full disclosure: I have a history with this stock. As many of my 23,500 Twitter followers may remember, in 2018 I picked 3D Systems as my stock of the year in an interview with Real Vision. Back then, the stock was trading for around $10. Four months later, DDD had rallied to about $22, winning me an award for the best stock pick. In 2021 we bought it again. The stock climbed to $50.
As the original creator of 3-D printing software and hardware, 3D Systems appears undervalued at its 25 October closing price of $9.10. The stock hit a two-year low of $7.61 during intraday trading on 13 October.
The Leadership Indicator on the above chart shows the stock performing on a par with the S&P 500. The Real Motion Indicator has a positive divergence in momentum.
Finally, note the run into resistance at the 50-day moving average (DMA). Once that clears at $9.28, we will look for a confirmation buy on the second day, risking anywhere from $0.75 to $1 in the expectation that, if the market holds up, the stock could rise to $12.50 or the 200-DMA resistance.
Meat-free food producer raises the stakes
The second company to catch our eye is plant-based food producer Beyond Meat [BYND], which recently announced that supermarkets Walmart [WMT] and Kroger [KR] will both sell its new vegetarian steak. Beyond Meat has reduced the product’s fat content and bolstered its protein count.
The company is due to report Q3 results after markets close on 9 November. As the chart below indicates, BYND shares have more than halved since the last set of quarterly results to close at $14.22 on 25 October.
On Monday 24 October BYND dropped to a record low of $11.90 during intraday trading, before rallying to close at $12.46. On Tuesday BYND put in a bona fide brick-wall bottom and mean reversion
We’re now watching for follow-through or digestion above $12.75. If BYND continues to move higher, or dips but holds its support level, there is slight downside risk to the all-time low of $11.90 and upside potential to $19. Again, this comes with the caveat about risk management and exiting positions prior to earnings announcements.
Mish’s ETF support and resistance levels
S&P 500 (SPY) Having cleared 380, it now must hold that level; 400 is the next level to watch
Russell 2000 (IWM) Rallied to the 200-WMA at 179 and stalled; next, it either clears that level or we watch 174
Dow (DIA) Resistance now at 322 as this is the only index above the 50-DMA; must hold 316
Nasdaq (QQQ) 274 support, 290 resistance
Regional banks (KRE) Back looking at the 63 resistance level
Semiconductors (SMH) Rallied to its 200-WMA at 190, now needs to clear it
Transportation (IYT) Needs more work but looks ok if holds 207
Biotechnology (IBB) A push through 125 should get this to 130
Retail (XRT) 62 resistance, needs to hold longer-term support at 55
Mish Schneider is MarketGauge’s director of trading education and research. Read more of MarketGauge’s market analysis here, and subscribe to their YouTube channel here. Mish Schneider's and MarketGauge's views and findings are their own, and should not be relied upon as the basis of a trading or investment decision. Pricing is indicative. Past performance is not a reliable indicator of future results.