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Dow: A High-Yielder Bottoming Out That We Want To Trade

Published Thu, 11 Jul 2019 13:33:24 -0400 on Seeking Alpha

Dow Inc. (DOW) has caught our attention as it is just off a new low. The name has slowly dwindled since its inception. You may recall that this chemical company was borne of the separation of DowDuPont (DWDP) into Dow, DuPont (DD), and Corteva (CTVA). The stock is down 21% in just a few months and has pushed the name into bear territory which we believe has the stock largely undervalued and worthy of a purchase for its high dividend yield and payout that is well-covered. While we are short-term traders at heart, we believe both investors and traders stand to gain from a purchase in DOW at present levels. Let us discuss our play and why we like the name here.
The play
Take a look at the chart since inception earlier this year:

Source: BAD BEAT Investing Chartist
Our chartist over at BAD BEAT Investing drew this very simple markup to highlight what we are seeing from the short-term chart. Basically we see the stock at a support right now and think traders can scalp short-term profits above $50. Longer-term, we like the name for the dividend and some growth from here because the sectors in Dow operates pretty much grows consistently.
The short-term trade
Current Price: $47.75
Target entry: $46-48
Stop loss: $45
Target exit: $51-$52
Estimated time frame: 3-6 weeks
While this is the short-term play which we think will work out in relatively quick fashion, we do like the fundamentals of the business.
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