Investors are rotating into overlooked parts of the market. This chemical stock is one
Dow Inc. (DOW) , the chemical and materials giant, has had its fair share of struggles since peaking in 2022. However, shares are starting to rebound since its latest earnings report may be signaling that the worst is behind it. The materials sector has been attracting renewed interest as investors look for opportunities in previously overlooked corners of the market. Dow could be one of the beneficiaries of that rotation. After an extended period of underperformance, improving fundamentals and a potentially more favorable sector backdrop make this a stock worth watching. Now the question is whether the technical picture can confirm the turnaround. I believe its well under way. The daily chart shows great promise and a nice risk/reward setup worth exploring. Key Points: – The stock has put in a double bottom around $27 – On that last leg lower we saw a bullish divergence in key momentum indicators – Price has broken above key moving averages in both the 50 and 200-day – Signs of strong relative strength within the material sector – Upside targets of $42 over the near-term There’s room to run higher as the turnaround looks like it will continue. While shares are overbought based on its RSI reading, we note that the first-time shares went above 70 in its RSI and broke above the 200-day moving average, it was the beginning of a rally not the end. On the weekly time frame, we confirm our thesis to stay long and with a solid risk/reward setup in place. The daily chart shows that we have much to reverse and that our first target of $42 looks attainable. We also confirm the bullish divergence seen in the recent double bottom and can use stops just below $30 which coincide with the rising moving averages. Given the stocks’ relative strength within the sector and the renewed momentum, look for Dow to be a slower and steady way to navigate the recent volatility. Both the near-term and long-term trend appear to be changing. So while we patiently wait for an even bigger upside move, we can collect that 4.1% dividend along the way. —Jay Woods with Chase Games DISCLOSURES: None All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, or its parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
