We’re adding a long in Corning ($GLW) to our portfolio this morning. This is a stock that doesn’t fit the pattern of many of our longs, it’s not already in an established long-term uptrend, but its price action on a short-term and intermediate basis suggests it could be in the early stages of a very strong move.
Here’s a weekly chart of the last 2 years.
The stock made a marginal new low in summer of last year, and then rebounded from that same level in November to form a double bottom. In the last month the 10wk has crossed back above the 40wk reflecting the recent upswing in momentum.
As we’re dealing with a stock in the very early stages of an uptrend, it’s also useful to look at any divergence that existed at the recent lows. In the chart below of the same period, I’m using a method taught by Jake Bernstein. We can see that MACD and Momentum bottomed along with price back in Sept 2011, and continued to rally while price made a new low over a year later. Only now is MACD surpassing the highest point within that divergent period, triggering a buy signal.
However, it’s in the daily chart below, where we can see the entire move from the November low, and the three previous occasions $GLW has toyed with the $13.00 level, that it gets really interesting.
In the last 2-3 weeks a lot of positive developments have transpired. We have a confluence of accumulation days, rising on increased volume, the two biggest of which produced the highest weekly close since October, and a significant breakout of the $13.00 resistance area.
This has put in place a series of higher highs and higher lows, with the 20,50,200-day MA’s all aligned and rising. Additionally, in the last 3 days we’ve seen a tight flag-like consolidation of the breakout, suggesting a near-term resumption of the uptrend.
A clean break and close below the last pivot low of $12.29 from 2/26, would suggest $GLW is tracing out a more complex basing pattern and would see us exit. That’s about 6% away and makes this a good risk/reward trade.