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New Long Plays

Dow Chemical - DOW - close: 44.60 change: +1.41 stop: 42.79

Company Description:
Dow is a leader in science and technology, providing innovative chemical, plastic and agricultural products and services to many essential consumer markets. With annual sales of $40 billion, Dow serves customers in 175 countries and a wide range of markets that are vital to human progress: food, transportation, health and medicine, personal and home care, and building and construction, among others. Committed to the principles of sustainable development, Dow and its 43,000 employees seek to balance economic, environmental and social responsibilities. Union Carbide Corporation is a wholly owned subsidiary of The Dow Chemical Company. (source: company press release or website)

Why We Like It:
Rising crude oil prices have put the squeeze on Dow since the company makes both chemicals and plastics, which require various oil and petroleum ingredients. Plus, the recent hurricane Katrina has disrupted some production capabilities and at least one analyst firm has reduced their earnings estimates on Dow and the rest of the chemical sector. In spite of the bad news the action today in shares of DOW suggest the worst may be behind it at least short-term. Falling crude oil prices certainly help matters and shares of DOW are bouncing from relatively strong support in the $43.00 region. Normally we would not want to chase a 3.2% move in shares of DOW but we may not have an alternative. If you're the patient type then wait for a dip back toward $44.00 or even $43.75 as a new bullish entry point. We're going to suggest plays right here. Our four-week target is the $47.75-48.00 level.

Picked on September 07 at $44.60
Change since picked: + 0.00
Earnings Date 10/27/05 (unconfirmed)
Average Daily Volume: 4.1 million

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Radian Group - RDN - close: 51.10 chg: +0.67 stop: 49.99

Company Description:
Radian Guaranty Inc. is the mortgage insurance subsidiary of Radian Group Inc., a global credit enhancement company headquartered in Philadelphia. Radian Guaranty provides risk management products and services to mortgage lenders nationwide; these services increase opportunities for people to buy homes with little or no down payment, protect lenders from default-related losses on residential first mortgages and facilitate the sale of low-down payment mortgages in the secondary market. (source: company press release or website)

Why We Like It:
Shares of RDN got a bit of a bounce today after Standard & Poors said that RDN was one of four municipal bond insurers that faces less risk from damage done by hurricane Katrina. The rebound in shares of RDN also happens to come just as the stock is testing support near its simple 50-dma, psychological support near $50.00 and its 38.2% Fibonacci retracement level (see chart). This looks like a good spot to enter short-term bullish positions. We'll limit our risk with a stop loss at $49.99 under support. Our target is the $54.00-54.25 range since RDN has significant resistance in the $54.50-55.00 region.

Picked on September 07 at $51.10
Change since picked: + 0.00
Earnings Date 10/19/05 (unconfirmed)
Average Daily Volume: 518 thousand
 

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