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3D Systems: Time To Hedge?


Shares of 3D Systems are up more than 40% over the last three months, but this month, we've had warnings about the stock and the broader market on Seeking Alpha.

Seeking Alpha contributor Investment Standard warned about increasing competition and declining revenues in a key segment for 3D Systems, and Seeking Alpha contributor Jeff Opdyke warned the market was overextended.

We look at Dark Pool data to see if there's anything worrisome there (not currently) and present two ways to hedge 3D Systems, one of which may be worth considering.

3D Systems: Deteriorating?

You're bullish on 3D Systems (NYSE:DDD) - otherwise you wouldn't own it, right? But maybe you've been thinking of adding downside protection after reading Seeking Alpha contributor Investment Standard warning of DDD's increasing competition from HP (NYSE:HPQ), GE (NYSE:GE), and Autodesk (NASDAQ:ADSK), and declining revenue from its 3D printers. Or maybe Seeking Alpha contributor Jeff Opdyke's warning that stocks are too late for rescue has you feeling a bit cautious.

Granted, you've been reading similar warnings about the market being over-extended for years, and if you moved to cash the first time you read one, you would have missed out on years of a bull market. But still, you figure the bull market does seem long in the tooth, so maybe staying long while adding downside protection might make sense. So we'll look at a couple of ways of hedging below, the second of which may be of interest. First, though, we checked SqueezeMetrics to see if there was any worrisome DDD action in dark pools.

Dark Pool Indicator For 3D Systems

Recall that the Dark Pool Indicator (DPI) looks at the ratio between institutional buying and selling in dark pools (private exchanges where institutions trade): a high DPI means most of the dark pool volume was institutional buying, and a low DPI means most of the dark pool volume is institutional selling. For DDD, most of the dark pool volume was institutional buying, as you can see below, with the DPI at 60%.

DDD didn't appear on the high-DPI list on SqueezeMetrics, because, although a 60% DPI is positive, it...