DowDuPont Rallies 8% After Earnings, But This Chart Shows Risk Through Early 2019

DowDuPont (DWDP) traded nearly 8% higher on Thursday after posting mixed earnings compared to Wall Street expectations.

The chemical company reported earnings per share of $0.74 and total revenue of $20.1 billion, compared to analyst estimates of $0.72 and $20.2 billion.

Also, as the company plans to split into three separate firms by June 2019, management announced the boards of directors for each company.

CEO Ed Breen explained that the three new firms would focus on materials science (Dow), agriculture (Corteva), and specialty products (DuPont). In the meantime, the company will implement a $3 billion stock buyback program focused on DWDP shares.

In analyzing the market cycles for DWDP on the chart below, we can see that the stock is in the declining phase of its current cycle. We can also see that there’s plenty of time left before the cycle concludes.

As it approaches a resistance zone, our analysis shows this rally is premature, and we are looking for a drop to near $50 in the coming months.

DowDuPont Stock Chart with Weekly Bars

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