JC Penney (JCP) — is this the time to buy after all? I suspect it is. (August 18, 2014)
I want to look a J.C. Penney ( NYSE:JCP ) here. As a lot of you know this is a stock that I featured the week before last on “Cramer’s Mad Money”. I was talking about this head and shoulder pattern, left shoulder, head, right shoulder somewhere along here. I was noting that if the stock closes above $10.00 that’s a great buy point, but I also said that I don’t think you need to wait for that, because there’s so much congestion here that buying on any little low here below $10.00 is a good thing to do as well.
The company announces earnings, they’re up into the 10.00’s after hours; the next day the stock opens up at $10.00, the stock opens up at $10.00 on expiration Friday, that’s going to get sold into. I saw some people in our forum griping and moaning about the fact that they announced good earnings and they think they’re going to make a gang of money. Some of them did, actually a lot of them did on these short-term options but then they sold into the strength.
The bottom line is this though; this is an analysis that’s based largely on the weekly chart. When you’re basing an analysis on a weekly chart you’re not going to get all lathered up over a daily chart or an intraday chart. If you want to make short-term trades then use short-term charts, this is not going to help you.
What I’m saying is this, that after a Friday where the stock opened great and closed kind of ugly, the following Monday here there’s no follow through, there’s like no follow through. So if you look at this is resistance, this is support on the last little go round, what do we have? We have the stock trading for two days, on Friday as well as today, on the close above this last resistance level and printing higher lows; so this is a stock that I think ultimately goes higher.
If you sold some of your position on Friday, because you thought the stock was going to $12.00 and instead it went to 9.50, you may want to consider buying that back. I think J.C. Penney ( NYSE:JCP ) still works, now you would have I would say 87 cents of downside. What I’m really talking about is the 50-day moving average is at $9.00, if the stock starts trading below that then it might be telling you that J.C. Penney ( NYSE:JCP ) is still just going to be in congestion for a while, but I think this plays.
I think this works so we’ll see what happens. If the stock, I’m even confident to say when the stock closes above $10.00 that’s going to be a major buy signal and I think that’s a time to either add to your existing positions or to get long in general if you’re not already.
Free Chart