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THE
MAGNIFICENT SEVEN Background:
Big Chemical Sarsaparilla – 1802, Gunpowder, WWI, General Motors, Nylon, Freon, Herbivores, Cosmetics, Petroleum Products (Composites), Polymers, Plastics, Kevlar®, Plutonium, Hotel DuPont, Brandywine Mills, Powder Mill Road, 1934, Bloodlines, French Revolution, Dynasty, Delaware, Yale, Secrecy, Nature, New Age, Genetics and Shanghai R&D Center. Charts 1 - 3 show the Magnificent Seven (Weekly) Cycles as they look riding thru Du Pont from a distant past and into the far future. The main “horses” are 16, 34, 52, 69, 104, 129 and 313-week cycles. Chart 1 shows the largest of these seven cycles from 1981 thru April 2005. The 313-week cycle is large and growing in amplitude. When these cycles come together at tops or bottoms it produces the characteristic growth and decline patterns in large DJIA components such as Du Pont. Chart 2 shows how these large cycles added together in 1998 to produce a significant rally in Du Pont Chart 3 depicts the match of the Seven Cycles versus the Actual Weekly Closing prices from 2000 thru April 2005. There is a reasonable match of the overall waveform (within 3%) if one assumes a linear trendline with a slope of 2.8% (per year gain). The Stagecoach To Purgatory (April 2006 – Feb 2007): In Chart 4, Du Pont is predicted from 2005-2007. It strongly suggests avoiding this stock from April 2006 thru Feb 2007 (a number of DJIA components are also showing this major downtrend). Expect a major rally (end of World Recession!?) after Feb/March 2007 in many DJIA component stocks leading into Chinese Olympics of 2008. Probably the latter part of 2008 is going to be a rough year for this stock leading into that major bottom of Dec 2008/Jan 2009. This will be followed by a predicted coming worldwide rally in equity markets (2009-2010) leading into the initial (large) major top in 2010 which will be followed by another top in 2011. Overall, DuPont is shaping up to be a major player with a rally after Feb 2007 followed by the big moves of 2009-2011. The top in mid- 2010 may be the highest dollar-weighted top during the period from Feb 2007 thru 2012. Bottom Line: A possible “summer rally” in the stock coming in the period from July 2005 thru Sept 2005 (but you may wish to be out after Sept 2005 thru Feb 2007 – recession coming). I like Du Pont after Feb 2007 for rally in mid-2007 thru early 2008 but a downtrend after that thru late 2008. There is a predicted significant “rally” move coming in this stock from late 2008 thru mid-2010. Comment: It does not seem to matter who the CEO’s of these large Corporations is from the standpoint of having any affect on the stock price. The CEO develops and implements the seven to ten year strategic vision and planning of the Company. If the CEO comes in when the 313-week cycle is reaching a bottom he maybe perceived as a “growth-oriented” visionary. If the CEO comes in at the top of the 313-week cycle then he is in for a rough ride with Wall Street/Board for the next three to four years and will have to trim Division manpower/resources and cut budgets. Remarks: The OKC bombing showed that flying glass hazards from shattered windows (over a ten square block area) was the major cause (80%+) of injuries and deaths. Du Pont’s Glass Laminating Solutions has developed PVB as well as newer SentryGlas Plus® which can resist explosive (terrorist) blast loads in conjunction with new window frame designs (i.e., Dlubak’s LamLock®) for developing a high nonlinear tension in the inner window layer. If a translucent nano-clay outer layer (to replace annealed or tempered glass) can be developed, then a major safety upgrade in window design is possible. Alternatively, one can bolt or attach a piece of Lexan behind the (i.e., storefront or office building) window if there are not egress issues from blocking windows to prevent flying glass shards from hitting personnel.
DISCLAIMER: The author is not a registered stockbroker nor a registered advisor and does not give investment advice. His comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to buy or sell a stock, option, future, bond, commodity, index or any other financial instrument at any time. While he believes his statements to be true, they always depend on the reliability of his own credible sources. Of course, the author recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction, before making any investment decisions, and barring that, we encourage you confirm the facts on your own before making important investment commitments.
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The
Magnificent Seven is a chronicle about the adventures of
Longwave Cycles who rode onto the “western scene” many
decades ago (would that be in 1913?). In this episode, we look
at the weekly closing prices of Big E. I. Du Pont De Nemours
& Co (DD) 
