Chemical stock Dow Inc (NYSE:DOW) has been quietly climbing the charts to start 2026, to the tune of a 58.4% year-to-date gain. On Friday, Wells Fargo hiked its price target to $45 from $30, culminating just shy of a 12-month high at $37.75. Investors may want to take their profits and run, with DOW testing a historically bearish long-term trendline.
Dow has climbed to within 3% of its 24-month moving average, after closing below this trendline for the past five months. Per Schaeffer's Senior Quantitative Analyst Rocky White, this signal has occurred 12 times during the last 20 years, after which the stock was higher one month later only 25% of the time with an average 5.4% loss. Three months later, DOW averaged a 11.1% drawdown with a 42% win rate.
This area roughly coincides with the shares' 12-month breakeven level as well. Shorter-term, keep an eye on DOW's 14-Day Relative Strength Index (RSI) of 68, on the cusp of "overbought" territory.
Options traders have been betting bullishly, to nobody's surprise. The stock's 50-day put/call volume ratio of 7.69 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits in the highest percentile of its annual range. An unwinding of these bullish bets could provide headwinds going forward.
