According to the Dogs of the Dow, Dupont was the best weekly performer this week at 14% up. Next in line was General Electric , GE, at 10.2%.  Of course only the 30 Dow stocks are included.

Here is our usual then, 28th of July, and now comparison;

The stock did follow our script but it did so with a bit of a lag going lower for longer. But then the rebound was even larger than expected. Putting all this together suggests that the bounce off the lows is not a wave 4 (of 1) but a wave 2 of 1. At about 40% this rebound may have very little left in it all though $62, the 200 day moving average, remains a possibility. We would sell in view of the Big picture (see previous blogs).

GE was number two. However, measured over about a month and a half it managed to increase by almost 50%. This is almost unheard of for such an ex-bluechip stock. A mini tantrum followed by a melt up??

Enjoy Thanksgiving.

If we were ever to write the 10 rules of trading – do not worry as it will not happen -  then one of them would most certainly be step aside at the double top level. DD is a good example particularly as in this case there are no less than 17 years separating the two events. Double topping is very much like the Mount Everest phenomenon, you climb to 100 because it is a round number and because it is there. The reason for the rule is that once reached the target becomes truly meaningless, that is it is now recognized as such and consequently all the “motivation” evaporates.

Google charts has the second top at $80.66. Several other charting services have different numbers. Stockcharts has the recent peak at $74.66. Bigcharts has a different number all together. For our purposes suffice to say that DD is either doing a big flat or completed waves 4 and 5. Either way it should go down to, at least, $36 but more likely into the high teens.

We had a nice wedge going into the peak (we were not watching so this unfortunately is hindsight). That all but guaranteed a move down to about $52 where the wedge started. Presently it looks like that completed waves 1, 2 and 3. Next, and we will be doing that in the next few weeks will be wave 4 and then 5 to complete the first down-leg, either 1 or A.

This company is in the business of making commodity chemicals. Things like nylon, kevlar, gunpowder  and chemicals used in the agri-business. Last quarter they increased the dividend and this quarter they lowered it. We would sell at about $58 as it is not entirely clear that wave 3 is done. We could be in 4 of 3 and not 4 of the entire sequence.

This Yahoo chart goes back to 1962, not far enough to make a reliable guess at what the count might be. In black we show the possibility that the drop from $75 to $20 was, in fact, a completed A-B-C correction reducing the value of this stock by about 75%, bearish enough to be a bear market by any standard. In purple we show the other alternative which is a little more in synch with the rest of the market. It is 5 waves down for wave A in a zig-zag, followed by a B-wave of about 60% and C having started with waves 1 and 2 (and another 1-2 in the more detailed chart). The two counts are, by the way, not necessarily mutually exclusive if instead of a zig-zag one looks for a double zig-zag. For the moment we prefer the purple scenario if for no other reason that it suits this  aristocratically named stock a little better.

Wave 3 has just started and should become a bit more decisive soon.