Maybe you bought Dow Chemical (DOW) in the past year or two for its relatively attractive dividend. Maybe you like the fundamental story (DOW is a holding in TheStreet's Action Alerts PLUS portfolio). Whatever made you click "BUY" it is OK because DOW's charts of look really bullish. Did I say really bullish?
Let me show you some interesting charts.
In this daily chart of DOW, below, I want you to put your thumb over the two-day spike in December in the $54-$57 area. Yes, I am guilty of "editorial license" with the chart and erasing two days of price action. It can be a slippery slope if you don't stop, but I have will power after spending my formative years at a military academy. By ignoring the previous high in December today's new high for the move up looks like a major breakout. I am not talking about a breakout from a seven-month consolidation since April but a two-year pattern (look at the weekly chart further below).
DOW is above the rising 50-day average line and the rising 200-day line. The On-Balance-Volume (OBV) line has generally been moving up from it's January low so we count it as positive. It is hard to see on this chart but the Moving Average Convergence Divergence (MACD) oscillator just moved up above the zero line for an outright go long signal.
Are you sitting down? Here is that really bullish chart (below). I can't say that I have seen this too often but I see a large inverse head-and-shoulders pattern. Most often an inverse head-and-shoulders pattern is a long-term bottom reversal pattern found after a long decline. Once in a while an inverse head-and-shoulders can be a continuation pattern. The uptrend continues when the pattern completes. The height of this pattern from the neckline at $54 to the bottom of the "head" when added to the breakout point at $54 gives us an initial price target of $66.
Not impressed? Look at this Point and Figure chart, below.
In this weekly Point and Figure chart, the breakout at $56 (soon I hope) will give us a potential longer-term price target of $79. Let's round up to an even $80. A close back below $51 will turn our charts neutral.
