Market Pro Gartley: Short Dupont

• Posted by Greg Harmon
• on November 17th, 2014

It is not often in a bull market when a strong bearish call gets made. Well actually that is not true. Market pundits have been making calls for a bearish reversal for 5 years. This gentleman, would never make such a call. Paul Dirac, was an English theoretical physicist who made fundamental contributions to the early development of both quantum mechanics and quantum electrodynamics. He had no time for the stock market. To him experimenting and seeing the actual outcome was truth. There is no Mr. Gartley as far as I know, but the Gartley harmonic pattern follows price movement, also truth.

In the markets price is truth. And the price action in Dupont, $DD, is screaming for a short trade. The chart above shows a bearish Gartley pattern. This pattern of price action based upon Fibonacci retracements triggered a sell signal on Friday and is confirming it with a move lower Monday. The target on a pullback is initially to the 38.2% retracement of the pattern, or to 69.72, with a second target below that at 67.75, the 61.8% retracement. Using 71 as a stop, this is a possible 4.4:1 reward to risk potential trade. You can use options to limit your risk to the premium paid and only risk 74 cents on thee November 28 Expiry 70.50 Puts.

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