Today’s downdraft in small-caps got you down? Don’t fret. There’s a silver lining — it’s easy to spot strong stocks. Simply look for the top performers, those remaining aloft while everything else is being dragged lower. Take Corning Incorporated (NYSE:GLW), for instance. GLW stock is up modestly and boasts one of the best setups on the board.
Like virtually every other stock these days, GLW finds itself in a strong uptrend that just carried it to a new 17-year high. The 20-day, 50-day, and 200-day moving averages are ascending beneath the price in true bullish fashion.
The latest catalyst propelling the glass manufacturer to new heights was a better-than-expected earnings release which sparked a rush of buying.
Since then, a high base has formed in the upper half of the breakout candle. The unwillingness of GLW to pull back at all speaks to the persistent bid that remains beneath the surface. Volume patterns are also supporting the stock here. The level of participation during the earnings rally was substantial, and the light volume during the recent consolidation shows an absence of any significant selling pressure.
On the price pattern front, GLW is on the cusp of completing a four-month cup-and-handle that should deliver further upside.
The GLW Stock Trade
With earnings long since passed, implied volatility has returned to a more modest level. And that makes buying options more attractive. If you’re willing to bet the coming breakout leads to a year-end run for GLW, then buy the Jan $32 calls for $1.20. Consider it a cheap, low-risk bet that buyers continue to dominate in the weeks ahead. Your reward is unlimited, and the risk is capped at the initial cost.
To minimize the damage if the stock sours, considering placing a stop loss below the 20-day moving average at $30.85.
As of this writing, Tyler Craig didn’t hold positions in any of the aforementioned securities. Want more education on how to trade? Check out Tyler’s trading blog, Tales of a Technician.