Corning Surges 3.56% as Bullish Engulfing Pattern Signals Potential Breakout Above $79.65 Resistance

Corning (GLW) closed the most recent session with a 3.56% gain, reaching $79.62, a price that aligns with recent bullish momentum observed in its candlestick patterns. The formation of a bullish engulfing pattern on the daily chart, characterized by a large white candle following a smaller black candle, suggests a potential reversal from a prior downtrend. Key support levels are identified at $76.15 (the low of the previous session) and $74.60 (a prior trough), while resistance is clustered around $78.80–$79.65, reflecting recent highs. The price action indicates a possible breakout attempt above the $79.65 level, which could validate a continuation of the uptrend if it holds.

The 50-day, 100-day, and 200-day moving averages provide a mixed signal for Corning’s medium-term trend. The 50-day MA (approximately $75.00) currently sits above the 200-day MA (around $52.00), indicating a bullish crossover that supports the short-term uptrend. However, the 100-day MA ($68.00) is closer to the 200-day MA, suggesting a potential flattening of the long-term trend. This divergence implies that while the stock is in a short-term bullish phase, the long-term trend remains neutral to bearish. The price’s ability to hold above the 50-day MA will be critical for confirming the sustainability of the recent rally.

The MACD (12,26,9) and KDJ indicators highlight conflicting signals. The MACD line crossed above the signal line in early September, forming a bullish crossover, and has remained in positive territory, suggesting strengthening momentum. However, the KDJ indicator (with 14-period settings) recently entered overbought territory (K=85, D=80), signaling a potential overextension of the rally. This divergence between MACD and KDJ indicates that while momentum is technically strong, caution is warranted due to the risk of a near-term pullback. The RSI (14) has also approached overbought levels (around 72), reinforcing the possibility of a correction.

Bollinger Bands illustrate a period of high volatility, with the bands expanding from a narrow range in mid-August to a width of approximately $2.46 (as of the most recent close). The price’s position near the upper band ($79.62 vs. upper band at $79.65) suggests overbought conditions, aligning with the RSI and KDJ signals. If the bands contract again, it may indicate a period of consolidation before a potential breakout or breakdown.

The volume-price relationship supports the recent price surge, with trading volume spiking to over 10 million shares on the 3.56% rally session. This increase in volume validates the strength of the move, as it aligns with higher participation. However, the volume has not consistently exceeded 10 million shares in recent sessions, indicating that the bullish momentum may lack broad institutional support. A sustained increase in volume would be necessary to confirm the continuation of the uptrend.

The RSI (14) calculation, based on the most recent 14-day average gains and losses, confirms the overbought condition (RSI ≈72). While this level historically suggests a potential reversal, the indicator’s warning nature must be contextualized with other factors. The absence of a corresponding bearish divergence in price and volume weakens the reliability of the overbought signal. A drop below the 50 threshold would be necessary to confirm a bearish shift, but the current RSI reading should not be interpreted as a standalone sell signal.

Fibonacci retracement levels drawn between the recent high ($55.33 on July 29) and low ($44.02 on April 1) provide key reference points. The 61.8% retracement level at $51.67 has already been surpassed, and the current price ($79.62) is well above the 78.6% level ($52.50). This suggests that the stock is in a strong bullish phase, with the next target potentially aligned with the 100% extension level ($58.64). However, the lack of a clear trend channel complicates the interpretation of these levels, as the price has deviated significantly from the Fibonacci sequence.

Backtest Hypothesis

The backtest strategy of buying Corning when RSI exceeds 70 and selling when it falls below 30 yielded a CAGR of -17.41% over the tested period, significantly underperforming the benchmark’s 48.46% total return. This poor performance may stem from the strategy’s reliance on a single momentum oscillator without incorporating confluence with other indicators like volume or trend lines. The maximum drawdown of 0% suggests the strategy avoided major losses during downturns, but its high volatility (51.17%) and negative Sharpe ratio (-0.34) highlight its inefficiency in balancing risk and reward. Integrating additional filters—such as confirming RSI overbought conditions with bearish candlestick patterns or divergence in MACD—could improve its effectiveness.