JCP Breakout

I posted a bullish note about JCP a few days ago on Stocktwits, but forget to put it elsewhere!  Drat.  Anyway, it’s a pretty nice inverse Head-and-Shoulders that would seem to portend the prospect of much greater upside in the longer term, even with today’s earnings jump.  It’s interesting that the after-hours rally hits $10.62, which is awfully close to the that upper line of resistance in the chart below.  If we hit that price today, I will sell and look to buy back.  Once that trend line is broken, I think JCP can probably run a good bit higher.


**UPDATE: So far, JCP has sold off and sold off some more.  it is re-testing the support trend line and 50 day moving average.  It has since now held and rallied from those levels.  Another stock I’ve been following, ACI, has broken the various support trend lines that I drew.  It is retesting its lows of 2014.  GDXJ has also broken down.

  1. Draft
    June 18, 2014 at 6:24 pm

    Any idea what’s going on in the broader U.S. markets? It doesn’t add up…

    • June 19, 2014 at 1:01 pm

      Draft, thanks for checking in. Sorry I have disappeared a bit. Work has gotten busy and I haven’t seen overly interesting behavior. I very much agree that “it doesn’t add up.” Market keeps churning higher despite all kinds of warning signs. I should have noted when the bearish patterns broke down a couple of weeks ago (many of them did). In the bigger picture, it seems like the parts in place for a minor problem to turn into a catastrophe. Everyone is on the same side of the boat, so to speak. If there becomes a need for cash at some point, exiting cleanly could be very problematic. The charts are not overly dire at this point (though SPY is pushing resistance on its long term rising wedge). GDXJ has finally rally toward completion of the inverse head & shoulders that could have serious upside. I will try to get an updated collection of charts out soon.
      What do you make of the current price action?

  2. Draft
    June 20, 2014 at 12:15 pm

    To me it seems “obvious” that the market is in danger but if it’s obvious to me it usually means I’m wrong, as I have been for a couple of months now. That’s why I don’t know what to think any more. Given that even big international crises like Ukraine, Iraq, etc. barely have caused blips, I can’t even imagine any news that would cause the market to stumble.

  3. June 23, 2014 at 10:28 am

    Draft, my feeling closely parallels yours regarding the market’s willingness to shrug off obvious political risk. However, that same insensitivity confirms in my own mind the irrationality of the current market environment. I agree that it will take some thing big – or at least unexpected – to shake the market’s upward momentum. Something surprising. When it happens though, I believe the Central Banks have created an environment that can turn a routine danger into a catastrophe. Everyone is leaning hard on the same side of the boat. There is no balance, no back-up plan. I recently read the Hedge Funds have the least cash on record. Central Banks and government investment plans are now confirms with over 30 Trillion in holdings. The history of markets and world politics tells us with virtual certainty that eventually the unexpected happens and people desperately want the comfort and security of cash. Whenever and why-ever that happens, we will find the market’s doors to be grossly undersized. Whenever confidence in Central Bank infallibility falters, I think the market collapse will be astonishing in its speed and depth. That said, i will probably have just “gone long” in the preceding days.

    As you saw, I had positioned myself with a number of bearish positions in the spring months. I got chased/scared out of them a few weeks ago (even held UPRO for awhile!). Last week I closed UPRO and starting leaning towards finding new bearish positions again. For now though, I remain pretty evenly long/short.

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