The materials sector is showing signs of activity, with the S&P 500 Materials Index up 8.64% in January. This strength reflects improving long-term momentum for the sector, both in absolute terms and relative to the S&P 500 Index (SPX). This led us to take a bottom-up look at the sector, and we discovered Dow Company (DOW) as a chemical stock with the potential for a turnaround. In late 2025, DOW found footing near long-term support from the 2020 low of around $22. After a solid run in January, the stock posted a new extended oversold rally, indicating that a significant low is likely forming on the chart. Long-term momentum has also improved, as reflected in the monthly MACD. In mid-January, the DOW broke above the 200-day (40-week) moving average (MA) and entered the weekly cloud (above $28.00) after completing the earnings report. The weekly MACD has turned positive in a medium-term bullish development, suggesting that the DOW will continue to track the upside over the next few months. The top of the cloud is the next major resistance level on the chart, intersecting the mid-April Fibonacci retracement level near $35.80. On the daily chart, the first support is clearly defined by the previous highs from September and October of last year, which roughly coincides with the 200-day moving average near $25.50. Since turnaround opportunities are inherently risky, we recommend using stop losses to manage risk. Consecutive daily closes below $25.50 are a reason to reduce your exposure. Finding opportunities in former laggards with new catalysts can have an additive effect on performance at the portfolio level. The DOW appears to be regaining momentum from its long-term foundations, suggesting it could recover along with the broader materials sector in 2026. —Katie Stockton with Will Tamplin Get free access to Fairlead Strategies research here. Disclosure: None. All opinions expressed by CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, its parent or affiliates, and may have been previously disseminated on television, radio, the Internet, or another medium. This content is provided for informational purposes only and does not constitute financial, investment, tax, or legal advice or a recommendation to purchase any securities or other financial assets. The Content is general in nature and does not reflect any individual’s unique personal circumstances. The above may not be appropriate for your particular situation. Before making any financial decisions, you should strongly consider seeking the advice of your own financial or investment advisor. 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