Daily Stock Pick of the Day - Tues., Nov. 2, 2010

“Chop” is the word today when stocks closed mixed just ahead of Tuesday’s mid-term elections and ahead of Wednesday’s decision by the Fed regarding monetary policy (“quantitative easing”). The Dow rose about 6 points, .1%, and closed at 11,124. The Dow was actually up about 125 points earlier today, but fell as the trading session wore on. The S&P 500 rose 1 point, .1% to close at 1,184 and the Nasdaq closed down 2 points, .1% at 2,504. The Volatility Index rose to about 22.


Mostly, traders and investors are playing the waiting game. In addition to elections and Fed policy, there is a jobs report expected on Friday. The good news today that ignited the short-lived rally was news on the manufacturing front. The Institute for Supply Management reported theat national factory activity rose to 56.9 in October – an increase from 54.4 reported for September. In addition, China reported their purchasing manager’s index (PMI) rose to 54.7 in October, an increase from 53.8 in September. Both reports proved higher than anticipated by analysts polled by Reuters.

Speaking of China, the stock pick of the Day is Dow Chemical (DOW). Dow manufactures plastic, chemical and agricultural products for the global food, transportation and other markets. Rising demand and a weakened dollar make this stock worth a look. Last Thursday, Dow surprised by beating analysts earnings expectations – thanks in large part to the rising demand in plastics. The whole industry, including competitors like Eastman Chemical (EMN), is doing well right now. Many of these companies have divested the parts of their business that were not profitable. In addition, raw material costs have become much cheaper in recent years. Dow’s 50-day crossed it’s 200-day today and this makes it a very bullish sign. The stock closed today $30.89 and I like the $30 range as an entry point. I think this stock will work it’s way up to the $38 range, if you’ve got some time – over the next four to six months.


As always, stay cautious. This week will be interesting for sure. Happy Trading!

Obligatory Disclaimer: This blog is not authored by a financial advisor or a broker/dealer. The author(s) of this blog are not registered investment advisers or registered broker/dealers. The author(s) of this blog do not provide investment or financial advice or make investment recommendations, nor are in the business of transacting trades, nor do they direct accounts or give trading advice tailored to any particular reader’s situation. Nothing contained in this communication constitutes a solicitation, recommendation, promotion or endorsement or offer by the author(s) of any particular security, transaction or investment.

Trading securities involves high risk and the loss of any funds invested. Investment information provided may not be appropriate for all investors and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. The suggestions contained in this blog are for informational purposes only and the author is not liable for any losses incurred as a result of actual investment activity on the part of the reader. This blog is presented for information purposes only and past results do not guarantee future performance.