A very important technical tool that savvy investors have learned to incorporate in their technical analysis is the 50-day moving average (DMA) line.  The 50 DMA line plays a pivotal role relative to a stock's price.  If the price of a stock is above its 50 DMA then odds are that its 50 DMA will act as formidable support.  Conversely, if the price is below its 50 DMA then the moving average acts as resistance.  Healthy stocks sometimes trade under their 50 DMA lines briefly, but usually a strong candidate will promptly bounce and repair a 50 DMA violation. When a stock has violated its 50 DMA line and then lingers beneath it, the stock's outlook gets worse and worse as it spends a greater period of time trading under that important short-term average line. Once the 50 DMA line starts sloping downward it should also be acknowledged that the stock has been struggling for a while, and it might be time to reduce exposure and look for places to put that money to work in stronger buy candidates.

Corning Inc. (GLW +$0.17 or +0.64% to $26.53) is testing support at its 50 DMA line. Its Earnings Per Share (EPS) rating is a strong 96, however its Relative Strength (RS) rating is now at 78, just under the usual 80+ guideline.  This stock was recently featured on Tuesday, June 3, 2008 in the CANSLIM.net Mid Day Breakouts Report (read here) with a $28.17 pivot point and a $29.58 maximum buy price and the following note: "Y - High ranked leader with a great annual earnings growth history (the A criteria). Trading near 52-week and multi-year highs after recent gains backed by above average volume, its light volume consolidation is forming what may be considered a high handle. Gapped up on 4/29/08 whe last noted after reporting stronger quarterly results. Earnings rose +57% and sales jumped +24% for the quarter ended March 31, 2008 versus the year ago period." 

As long as GLW continues trading above its 50 DMA line it may be considered in healthy shape. However, market conditions (the M criteria) overall need to improve, and then it would still need to produce a solid gain above its pivot point with heavy volume to trigger a proper technical buy signal. Until then, patience is paramount. Disciplined investors stick to buying stocks within the investment system's guidelines and remember to always limit losses per the 7-8% sell rule. 

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