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Dow Chemical (DOW) Showing Bullish Technicals But Could Fall Through $33.47 Support

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Jan 15, 2013 ( via COMTEX) -- Dow Chemical Co (NYSE:DOW) closed Monday's trading session at $34.28. In the past year, the stock has hit a 52-week low of $27.45 and 52-week high of $36.08. Dow Chemical (DOW) stock has been showing support around $33.47 and resistance in the $34.69 range. Technical indicators for the stock are Bullish and S&P gives Dow Chemical (DOW) a neutral 3 STARS (out of 5) hold rating. For a hedged play on Dow Chemical (DOW), look at the Mar '13 $34.00 covered call for a net debit in the $32.86 area. That is also the break-even stock price for this trade. This covered call has a duration of 60 days, provides 4.14% downside protection and an assigned return rate of 3.47% for an annualized return rate of 21.10% (for comparison purposes only). A lower-cost hedged play for Dow Chemical (DOW) would use a longer term call option in place of the covered call stock purchase. To use this strategy look at going long the Dow Chemical (DOW) Jan '14 $23.00 call and selling the Mar '13 $34.00 call for a total debit of $10.03. The trade has a lifespan of 60 days and would provide 3.65% downside protection and an assigned return rate of 9.67% for an annualized return rate of 59% (for comparison purposes only). Dow Chemical (DOW) has a current annual dividend yield of 3.78%.

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As of Friday, 01-11-2013 23:59, the latest Comtex SmarTrendA? Alert,
an automated pattern recognition system, indicated an UPTREND on
05-29-2012 for DOW @ $31.83.

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