Reading a stock chart to benefit trading requires an objective perspective that embraces multiple time scales and reasonable error tolerance. The reason I write this analysis is purely for myself because I have a large pile of cash looking for a new entry point. I have been trading DDD many times since it was $28.
There is no Header-shoulder pattern that has been formed on the daily chart as someone so stubbornly claimed. There is no left shoulder---the two days decline from 11/6/2013 was insignificant because it was only two days and depth of the decline was too shallow. In fact, the two day decline is well within the long body of the candle prior to that. When we speak of classic chart patterns such as double tops and head-shoulders etc, the right size of the wave of swings must be large enough to filter out potential errors. A simple way to confirm a pattern is to look for the same pattern under a doubled time scale. For example, as we look at DDD's two day chart (vs daily chart), the the 2 day decline from 11/6/2013 completely disappear.
The chart pattern of DDD from the time scale of 2 days and up is perfectly healthy.
However, the recent consecutive bearish candles from 11/19 cannot be ignored as it was amplified by large volumes. The subsequent recovery has been too weak. Since the weak recovery corresponded to the light volume before Thanksgiving, we cannot read too much into it either. The trading pattern in the coming week will tell much more telling.
My gues is that DDD will decline during next week. For one thing, the large volume of distribution from 11/19 does not seem to have completely played out due to the Thanksgiving interruption. For another, it is clear that further down side is to go with SSYS which is typically in synchronization with DDD. Peer performance is very important.
I am not bearish on DDD. Due its bullishness in the larger time scale, I will buy on dips next week if it so
Wow! DDD simply did not give swing traders much chance. The news this morning was apparently not factored into the price in the past. I was able to purchase 200 shares at open, but the majority of my orders were not filled.
I do not plan to chase it, not at the introday high. I know that If am patient, I can get it at a lower price than it is now.
My long waited pul-back is now taking place. Today is the second day of pullback. I insist that it must be regarded as a healthy pullback because of the following.
(1) Long term trend, weekly chart for example, are still in tact.
(2) The two day pullback is in concert with the general market. Hence it is not clear how to separate the weakness of the market or that of itself.
(3) The decline is on declining volume.
This is the time to have guts to buy on dip. I have not done so but will report once I do or if I do. Finding the optimal entry on dip is no easy matter.