How to Dumpster-Dive Your Way to Trading Gains

This post How to Dumpster-Dive Your Way to Trading Gains appeared first on Daily Reckoning.

Alright you bum, toss on some old rags and pinch your nose—you’re going dumpster diving today!

Relax. You won’t be digging up any rotten fruit or other filth from your local Whole Foods trash bins. I’m talking about tearing through the bowels of the stock market to find stocks that are down on their luck.

And at the bottom of the dumpster is one stock investors have long given up for dead. But it’s so oversold it could give us a 10% gain in a single trading day. And the best part is, its shares have been practically immune to the market’s violent price swings…

Look, I don’t have to tell you the market’s a wreck right now. And as stocks yank traders in eight different directions at once, it’s tough to get a bead on the daily ups and downs of the major averages.

Go chasing after major moves higher or lower right now and you might as well set your money on fire. This market is like a junkie trying to get his act together. Sure, you can stop by for a visit when it’s having a good day. But for God’s sake, don’t give it a bunch of cash and hope for the best.

That’s why we’re going dumpster diving today, as strange as that may sound. The stocks we’re sifting through have been down on their luck for months. Even the bitter-enders have bailed on these washed-up trades. And believe it or not, that can be great news for us because many of these cellar dwellers aren’t correlating with the wildly oscillating overall market.

See, we’re looking for stocks where investors have abandoned their last hope. These are names that once made folks a ton of dough—but have since died long, painful deaths. So what better industry to start with than our old pals, 3D printers!

You might recall the 3D printing craze from a couple of years ago. If you’ve been around these parts long enough, you also know that we made more than a few profitable trades on these stocks, too.

2013 was a gold ribbon year for 3D printer stocks. There was nothing this new technology couldn’t do. We were going to print tools, cars, assault rifles, houses, girlfriends, food, and maybe another 3D printer for the guest room.

The go-to trade was 3D Systems Corp. (NYSE:DDD) – which returned a princely 140% in 2013. But by January 2014 the hype got out of hand. In reality, all we were getting was plastic junk from the consumer models. Then red-hot trade started to fizzle. Now you can pick up DDD for less than $13 per share. That’s 87% off its highs.

A 3D Diseaster

But lately, DDD is showing signs that it might be ready to make a U-turn off the highway to hell…

As DDD has attempted to push higher and form a bottom, it’s beginning to consolidate in a tight range, completely ignoring the big up-and-down swoons of the broad market. We need to hop on plays like this because they aren’t correlating with the whipsawing major averages right now. DDD has already showed us the beginnings of an oversold bounce. Now, with a little momentum and follow-through, it could deliver us double-digit gains in no time flat…

So hold your nose – it’s time to take that dumpster dive.


Greg Guenthner
for The Daily Reckoning

P.SGet ready to dive in! If you want to cash in on the biggest profits this market has to offer, sign up for my Rude Awakening e-letter, right here. Stop missing out. Click here now to sign up for FREE.

The post How to Dumpster-Dive Your Way to Trading Gains appeared first on Daily Reckoning.