Mysterious Rally In 3D Systems

Joel Elconin is the co-host of Benzinga's #PreMarket Prep, a daily trading idea radio show.

3D Systems Corporation DDD shares were trading higher by $1.82 (15 percent) at $13.52 in Thursday's session. The issue is trading higher despite reporting a Q2 miss for EPS ($0.03 vs. $0.08 estimates) and sales ($170.5 million vs. $171.7 million estimates).

However, some investor or group of investors has found a silver lining in the report. After a modestly higher open, 3D retreated and made a new 3 1/2 year-low by $0.03 at $11.66 and sharply reversing course.

The ensuing rally triggered a circuit breaker on its way to $14.75, before falling back under $14. The current high is slightly above its July 30 high of $14.30.

One possible explanation for the rip-roaring rally may be the extremely high short float of 34 percent of the outstanding shares, leading to shareholders finally deciding to take some profits after the report.

Adding credence to this thesis is the fact the issue is having an above-average volume session. So far, 9.2 million shares have traded compared to its 20-day average of 3.6 million.