There are often two phases in the trajectory of a hot stock. The first phase is when growth prospects are pushing shares higher.
The second phase comes when momentum investors take over and keep pushing shares higher still, even if the financial statements are flashing warning signs. That second phase can end quite badly when momentum investors head for the exits.
That encapsulates the rapid rise and sudden plunge for 3D Systems (NYSE: DDD), which after a meteoric rise in recent years, has stumbled badly in 2014 and is now below its 100-day moving average.
After nearly reaching the $100 mark in early January, shares began to lose altitude in ensuing weeks and plunged sharply last week after the company reported disappointing fourth-quarter results. (more)
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