Top technician says "Dow dog" Verizon is headed for a breakout

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Chart points to breakout for Dow dog Verizon

As investors hunt for value in the new year, one top technician says there's something in the charts suggesting "Dow dog" Verizon is the best play for a catch-up.

The classic "Dogs of the Dow" theory involves investing in high-yielding Dow stocks, which typically means investing in some of the biggest laggards of the past year as a value play heading into a new year. But Verizon bucked that trend, remaining one of the highest-yielding Dow stocks while shares of the telecom giant outperformed, up 8 percent over the past year and one of the only "Dogs of the Dow " stocks to end in the green.

According to Carter Worth, head of technical analysis at Cornerstone Macro, Verizon could be setting up for even more gains this year.

Worth's charting reveals that while the classic "Dogs of the Dow" stocks have had record outperformance compared to the broader index until late, the DOD ETF, which tracks the highest-yielding Dow stocks, broke its nine-year win streak in 2018.

"The key of course is that as the markets sold off, which is what you would expect, a very defensive asset like this was doing well," Worth said Friday on CNBC's "Options Action. "

Shares of Verizon have pulled back nearly 8 percent from their 52-week intraday high of $61.58 in November. However Worth believes the stock's rebound off its 150-day moving average "has all the look of a bearish-to-bullish reversal."

"What appeals to me is this check back to trend and the bounce," he said. "The premise is the same you want to play for a catch-up."

Worth's charting also suggests that while the stock has given back most of its gains after breaking out from a bullish wedge formation, it's also managed to establish support around the $53 level.

"What's critical here is if you do break out to a 52-week high and then you were to fall back to the level from which you broke out you often get that pivot and then go again," he said.

Shares of Verizon are up more than 1 percent so far in January and have risen nearly 23 percent from the 52-week closing low of $46.09.

"You have potential that the market has prospectively more absolute downside risk and/or relative with Verizon trying to narrow the gap," Worth said. "I think it's a great place to be on the long side.

Shares of Verizon were higher Monday afternoon at around $56.80.