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Fast Money HomeFast Money Rapid RecapAbout Fast MoneyFast Money BiosFast Money Web ExtraFast Money Disclaimer
Text Size
Jul.29
5:45 PM ET
Wednesday, 29 Jul 2009
Dow Chemical Could Reveal Volumes About Recovery

Entry Point

Dow Chemical [DOW  Loading...      ()   ] could provide compelling insights into the recovery when they report on Thursday, but only if you know what to look for!

As you may know Dow Chemical makes the building blocks for thousands of everyday items ranging from shopping bags to cologne and food dye.

Because their clients are so diverse, if sales are particularly pronounced in one area it can signal overall strength or weakness for an entire sector.

(DOW)
Loading...       (%)

What the analysts say:

On average, analysts polled by Thomson Reuters expect Dow Chemical to post a loss of 8 cents per share on revenue of $13.3 billion. In the same quarter of last year, the company reported a profit of 81 cents per share on revenue of $16.38 billion.

You'll know the economy is improving if: Dow reports its customers have exhausted old supplies and are starting to buy again. When the recession hit, many of Dow's customers stopped buying its products, preferring instead to exhaust existing supplies, a process known as "destocking."

You'll know the economy is not improving if: Destocking continues and Dow's customers hold back on additional purchases. Dow rival DuPont Co.'s second-quarter profit was supported mainly by agricultural sales. If Dow's performance mirrors DuPont's, it'll be a bad sign for its core chemical business.

What's the trade?

Both Pete Najarian and Tim Seymour like Dow Chemical [DOW  Loading...      ()   ] on a pullback. However, they both say not to chase it.

Elsewhere in the space, it's worth noting Guy Adami is bullish on Eastman Chemical [EMN  Loading...      ()   ] while Tim Seymour is a fan of BASF [BASFY  Loading...      ()   ].

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Trader disclosure: On July 29th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Najarian Owns (FXP) Long Calls; Najarian Owns (MET) Long Calls; Najarian Owns (BAC); Najarian Owns (INTC) Call Spread; Najarian Owns (JPM) & Short (JPM) Calls; Najarian Owns (MS) & Short (MS) Calls; Najarian Owns (MSFT) & Short (MSFT) Calls; Najarian Owns (PALM) Call Spread; Najarian Owns (V) & Short (V) Calls; Najarian Owns (YHOO) Call Spread; Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU);Terranova Owns (MSFT), (MCD), (AMZN); Terranova Works For (VRTS) ; Seymour Owns (BAC), (BHI), (FCX), (SBUX), (EEM); Seymour's Firm Is Short (PBR), (PTR)

© 2009 CNBC

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