E I Du Pont De Nemours And Co (NYSE: DD)

E. I. du Pont de Nemours and Company operates as a science and technology based company worldwide. Its Agriculture segment provides corn hybrid, soybean, canola, sunflower, sorghum, inoculants, wheat, and rice seed products under the Pioneer brand; and herbicides, fungicides, and insecticides. The company’s Electronics and Communications segment supplies materials and systems, including photopolymers and electronic materials for photovoltaic products, consumer electronics, displays, and advanced printing. The Industrial Biosciences segment develops and manufactures a portfolio of enzymes. The Nutrition and Health segment offers cultures, emulsifiers, gums, natural sweeteners, and soy-based food ingredients. The Performance Chemicals segment offers industrial and specialty chemical products for markets, including plastics and coatings, textiles, mining, pulp and paper, water treatment, and healthcare; titanium dioxide products. The Performance Materials segment provides thermoplastic and thermoset engineering polymers, elastomers, films, parts, and systems and solutions for the automotive original equipment manufacturers and associated after-market industries. The Safety and Protection segment primarily offers nonwovens, aramids, and solid surfaces for the construction, transportation, communications, industrial chemicals, oil and gas, electric utilities, automotive, manufacturing, defense, homeland security, and safety consulting industries. The Pharmaceuticals segment represents its interest in the collaboration relating to Cozaar/Hyzaar antihypertensive drugs.

To review E.I.’s stock, please take a look at the 1-year chart of DD (E. I. du Pont de Nemours and Company) below with my added notations:

1-year chart of DD (E. I. du Pont de Nemours and Company)

DD had been trading in a sideways range for the last 4 months. During that period of time the stock had also been bouncing within a common chart pattern known as a rectangle. Rectangle patterns form when a stock bounces between a horizontal support and resistance. A minimum of (2) successful tests of the support and (2) successful tests of the resistance will give you the pattern. DD’s rectangle pattern had formed a $60 resistance (blue) and a $56 support (green). Now that the stock has broken its rectangle resistance higher prices should follow.

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The Tale of the Tape: DD has broken through the resistance of its rectangle pattern. The possible long position on the stock would be on a pullback to $60. The ideal short opportunity would be on a break back below $60.

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Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!

Good luck!

Christian Tharp, CMT

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