The Chart du Jour

Fade Merrill on Corning

Aug 29,2000

By, Barclay T. Leib

Merrill Lynch issued a strong buy recommendation on Corning Incorporated (symbol: GLW) this morning, stating a target of $400 per share for the stock. Thanks, Merrill for doing so right on the all-time highs -- how useful. In actuality, if Elliott and Fibonacci techniques are used, holders of Corning should be mentally preparing themselves to SELL this stock not buy it.

Pictured below is the daily chart of Corning going back to its April low. Could one ask for a more classic looking Elliott 5-wave advance? Fibonacci bands suggest that an extrapolated high at just under $320 would make the intervening highs and lows on the way up "fit" the retracement lines in a lovely fashion.

Chart created using GET End-of-Day

Meanwhile, on a weekly basis, the picture is equally as clear, even if the Fibonacci bands are not quite as "tight" and compelling. One can make a case, however that basis the weekly chart, an extrapolated high at $324 might just be it for a long while.

Chart created using GET End-of-Day

So to Merrill we say, thanks for the advice, but your timing is horrific. Will this be yet another situation like Amazon where you maintain a strong buy until the stock has fallen 70% and then issue a "hold" downgrade? Anyone who puts much faith in Wall Street buy recommendations these days is a patsy. Fade this one with sell orders between $319-$324 if you're long, and perhaps long put positions if you want to go short. A short-term overshoot to the upside is of course possible, but even if this transpires, the intermediate term picture will be the same: sell, don't buy.

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