Bull Charts of the Day -- Dow Chemical and Arista Networks

"I have two guns, one for each of ya."

-- Doc Holliday

NEW YORK (Real Money) --Sometimes when looking at this market I swear I'm seeing double. It's enough to make your head spin. So, why not take Doc's approach and target two things at the same time rather than just one?

For instance, I like the charts of both Arista Networks  (ANET) and Dow Chemical  (DOW). These are two very different "people," if we can refer to companies or charts as people. One in tech and the other in chemicals.

Even if I'm a bit off with one, there's an uncorrelated chance I hit on the other. That's my thesis with these two very similar potential breakouts.

ANET is up almost 18% for the year, but it's not lower for lack of trying. February was a rough start, but the stock recovered along with the broader market. March brought it to breakout level where the November highs of $90 didn't feel so out of reach, but again ANET did its best to drop down, spending five weeks pushing lower. Like I said, it hasn't been for lack of trying. Here we are again, though, with the shares trying for another breakout. Really, ANET needs two simultaneous breakouts. First, it needs a push through $72. This "breakout" should be met with big resistance at $74. If (and it is a big if) $74 allows entry, then ANET looks cleared to get itself back into the $80-$90 trading range.

But why this time? The stock failed in February and in March, so why now? Now ANET has some bullish divergences in momentum and volume, as well as trend. If we look back to the initial break under $72 in March, we'll find the answers. Although price is the same now as it was then, we see a stronger slow stochastics, a relative strength index (RSI) that is higher now and a force index in bullish rather than bearish territory. These should give bears some pause and bulls a reason to be optimistic.

DOW will likely find a different class of investor or trader. Although some would view the stock as more conservative than ANET, including me, it is higher by almost the same percentage this year. While DOW has had its pauses, the stock has been more consistent than ANET in its bullish move. This one appears to already be on a breakout based on yesterday's close.

May brought a consolidation channel, or bullish flag, after the push off the March lows. Based on the prior move, I would target $58-$60 on the upside. This target is based on the move from March lows to the top of the channel, then adding that to the top of the channel. As far as DOW's secondary indicators go, they are all currently in bullish territory with a nice push higher in the bollinger bands opening the stock up to a squeeze higher after the consolidation flag for the last six weeks.

If I had to target only one, I would put DOW in the lead. Bob Lang, who did a nice piece on Dow last week, probably agrees, and the stock is also a holding in Jim Cramer's charitable trust, Action Alerts PLUS, with a price target of $60, so I consider myself in good company. Fortunately, I have two guns, so I'm targeting both this afternoon if these moves hold up.

Editor's Note: This article was originally published at 10:30 a.m. EDT on Real Money on June 3.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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