Despite internal fights and missing revenues as the January earnings report showed, DuPont’s (DD) share price is poised for further appreciation.
The company cited the stronger US dollar across the world as being the main cause for its revenue miss and said that the loss was quite stronger than expected.
However, strong positioning and a pickup in global demand should only boost the share price.
A pick-up in global demand should be expected as both US and now the Eurozone show signs of improvement. The United States is growing at a healthy 3%-4% pace on an annual basis while recent PMI’s in Europe show expansionary territory in the services sector. Put that on top of the ECB easing and growth is poised to set in on the medium to long term.
Technical aspects also favor a higher DD price as the price is hovering now above the $78 level but the trip to these highs was coming after a triangle that acted as a reversal pattern broke higher. It means that a complex correction ended around the $72 level and the move to follow from that point to be impulsive.
However, a correction is needed and I would favor buying call options on DuPont on a move lower into the $76.50 area, choosing an expiration date like the end of the month if the move comes in the 2nd half of the month, or a one-week expiration date if it comes still in the 1st part.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
