A Bad Trade

October 26, 2015

Mish's Daily

By Mish Schneider

This past weekend, Keith and I traveled down to Truth or Consequences, New Mexico. In 1950, Ralph Edwards, host of the then radio quiz show Truth or Consequences, announced he would air the program from the first town that renamed itself after the show. Hot Springs, the town’s original name, won that contest.

As a result, the main feature of the town, its extraordinary hot springs and their healing powers, fell into obscurity. The more ominous sounding replacement name sent the town into a financial blight, which 65 years later, still exists.

A bad trade.

While we were fortunate enough to be soaking in the natural hot springs, I began to wonder about certain stocks that have gone into obscurity and why.

Particularly, I thought about areas of the economy that combine American innovation with Technology. Furthermore, I factored in megatrends I see that are both in their infancy and/or already evolving.

The other main characteristic of Truth or Consequences is Spaceport America. With 12,000 feet of pristine runway and a futuristic-looking terminal, the citizens of Truth or Consequences were promised great things.

Yet, the first launch from Spaceport America in 2006 malfunctioned well before it got suborbital, crashed, and spilled the ashes of a veterinarian in the desert.

So, here’s a town haunted by a vague name with 60% of its population on a fixed income and a Spaceport that has cost the town millions in taxpayer money.

The Future of 3D Printing-Another Truth or Consequences?

Since its spectacular rally in 2013, 3D Systems Corp. (DDD) has fallen to levels not seen since 2011.

First developed in the 1980’s, the technology has advanced. By 2010, many believed that 3-D printing could aid in sustainable development in the developing world.

Currently, 3-D printing is revolutionizing everything from manufacturing to Food to Medical Applications to Environmental uses such as replacing damaged coral reefs.

3D Systems’ technologies and services are used in the design, development and production stages of many industries, including aerospace, automotive, architecture, health care, dental, entertainment, recreation and consumer goods.

The company, however has been plagued with issues. Most recently, DDD had to award $11,281,681.46 to “Print3D” because of a breach of their contract.

The stock has tumbled by 66.57%. Consistent with the plunge in the stock price, the company's earnings per share are down 700.00% compared to the year-earlier quarter.

When Can We buy?

This year, the market expects an improvement in earnings ($0.31 versus $0.11). Looking at the charts, the 2015 low is 10.67 with Monday’s low 10.77. Tomorrow, I will review the 5 Criteria of What Makes a Solid Reversal Pattern as a guide for trading DDD.

Perhaps, DDD is ripe for a buyout. Perhaps a double bottom is in the works.

Regardless, in Truth or Consequences, many still believe in Spaceport America’s future. Ted Turner has acquired thousands of acres of land and opened up a boutique hotel.

I still believe in the future of DDD. Timing, of course, is everything.

S&P 500 (SPY) Not surprising to see an inside day. Over 206 and therefore not only the new level to hold but now a confirmed phase change to Accumulation

Russell 2000 (IWM) 116 still within reach. Inside day here as well so under Monday’s low some caution

Dow (DIA) Over 175.62 the 200 DMA and therefore not only the new level to hold but also a confirmed phase change to Accumulation-Inside day

Nasdaq (QQQ) Shooting Stars are a Japanese candle stick formation worth noting. They mean either a strong continuation of the trend is in the works or this trend is over.

Volatility Index (VIX) Made a new 60 day low Friday and got follow through Monday. Also worth watching

XLF (Financials) Wouldn’t be surprised to see a move to 23.80

KRE (Regional Banks) 42.72 the 100 DMA now the area to hold

SMH (Semiconductors) Broke 55.50, still pivotal with 54.18 the 200 DMA

IYT (Transportation) September 17^th high 149.86. Friday high 149.82. Monday high 149.59. Watching for a pattern

IBB (Biotechnology) Tried 320 and closed under it.

XRT (Retail) Inside day. Looks skeletal. To get meat on the bones needs to clear 46.46 last week’s high

ITB (US Home Construction) A close over 28 gets me even more interested

GLD (Gold Trust) Subscribers: Keep a mental stop of 112.15 to get long with a stop under 111

SLV (Silver) Like over 15.19 on a closing basis if holds 15.00

GDX (Gold Miners) GDX needs to clear 17.00, hold 15.40

TAN (Guggenheim Solar Energy) If oil prices stay low so will this