DOW has had a wild ride this past year. If you look at the chart, it slid all the way down close to 21 in August, then basically whiplashed back up to the low 40s by spring before giving up ground again. That kind of volatility usually scares me off, but the fact that it’s now cooled off to 34.20 after such a run grabs my attention.
I’m leaning bullish here, with a target of 39.50 in the next couple months. Here’s why: first, chemicals pricing is starting to stabilize after last year’s oversupply drama (that August crater lines up with a glut and weaker demand). DOW’s recent cost cutting moves should start showing up in margins maybe not massive, but enough to get noticed if demand stays steady from here. Also, cyclicals like this tend to catch a tailwind when the market thinks a soft landing is sticking, and right now there’s a lot less recession chatter than six months ago.
Biggest risk is another surprise macro shock or if input costs spike again (energy prices especially). DOW isn’t exactly nimble, and one bad quarter could drag it right back to the 20s so this is not a set and forget play.
The main thing I’m watching for is their next earnings. Anything that hints at better demand in Europe or Asia could be enough to get this moving toward my 39.50 target pretty quickly. If they guide down or talk about more plant shutdowns, I’ll be out in a hurry. Pretty decent risk/reward if you can stomach some chop.
