This chemical stock has the potential for a big turnaround higher, says Katie Stockton
The materials sector is showing signs of life with an impressive 8.64% gain for the S & P 500 Materials Index in January. This strength reflects improved long-term momentum for the sector, both on an absolute basis and relative to the S & P 500 Index (SPX) . This prompted us to review the sector from a bottom-up perspective, and we discovered Dow Inc. (DOW) as a chemical stock undergoing a potential turnaround. In the second half of 2025, DOW found a footing near long-term support from the 2020 low, near $22. After a strong showing in January, the stock flashed a new long-term oversold upturn, indicating a major low has likely been established on the chart. Long-term momentum has also improved, as reflected by the monthly MACD. In mid-January, DOW broke out above its 200-day (40-week) moving average (MA) and has pushed into the weekly cloud (above $28.00) after digesting its earnings report. The weekly MACD is turning positive in a bullish intermediate-term development, suggesting DOW will see upside follow-through over the next 2-3 months. The top of the cloud is the next major resistance level on the chart, which meets with a Fibonacci retracement level near $35.80 in mid-April. On the daily chart, initial support is well-defined by former highs from last September and October, which roughly align with the 200-day moving average near $25.50. Because turnaround opportunities are higher risk in nature, we recommend using a stop-loss to manage risk. Consecutive daily closes below $25.50 would be a reason to reduce exposure. Finding opportunities in former laggards that have new catalysts can be additive to performance at the portfolio level. DOW appears to be emerging from a long-term base with improving momentum, suggesting it can rebound in 2026 alongside the broader materials sector. —Katie Stockton with Will Tamplin Access research from Fairlead Strategies for free here . 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. 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