NEW YORK (TheStreet) -- Dow Chemical is trading a bit heavy today following reports that its CEO is being investigated by the Securities and Exchange Commission. The weakness is inflicting only slight damage to the stock's very bullish setup.
Heading into today, Dow was on a seven-day winning streak highlighted by yesterday's close at fresh 2015 highs. During four of those gains, the S&P 500 closed lower.
Currently, Dow is stabilizing near its May peak of $52.35. This is the top layer of a key support/buy zone. The April high is just below at $51.90, marking the lower band. With selling pressure trending on the lighter side following this morning's negative news, DOW will likely hold this area. This would keep the bullish set up, which began in mid April after the stock convincingly cleared its 200 day moving average, well on track. Ahead for DOW, after it digests the news, is a run back up to its 2014 high of $55 for a major retest.
The near-term threat to Dow Chemical's rally would be a close at fresh June lows of ($51.50). That would indicate that more basing will be needed and that the damage from today's new is more extensive. Until then, Dow should be considered a low-risk buy near $52. Initial upside target is the $55 area. A significant pullback is likely after this major supply area is reached.Click here to see the below chart in a new window.