Put A Sock In It, JC Penney Was Going to Pop Anyway
- Posted by Greg Harmon
- on June 14th, 2011
Tuesday JC Penney (ticker: $JCP) hired Apple executive Ron Johnson as its new CEO and the stock jumped over 17% on the day Tuesday. As the pundits debated the value Mr. Johnson brings to the company and used that to rationalizethe rise in the stock price, I wonder if any of them had looked at the technicals for $JCP and other stocks in the sector. If they had they would have noticed that it was technically ready for an oversold bounce. Mr. Johnson’s hiring may have been a catalyst but look at the evidence from two companies that bracket JC Penney’s audience.
Sears Holdings, Ticker $SHLD
Sears Holdings, $SHLD, started its move from an oversold bottom late last week. It’s Relative Strength Index (RSI) broke back above the technically oversold line at 30 and the Moving Average Convergence Divergence (MACD) indicator crossed positive signaling the move higher. It is now near resistance of the 50 and 200 day Simple Moving Averages (SMA) which look ready to make a death cross. And printed consecutive candles with tailing tops. The run for $SHLD may be over already.
Nordstrom, Ticker $JWN
Nordstrom, $JWN, gapped higher Tuesday at the open and had run 75% of its move higher before the market got wind of the $JCP announcement around 11:00 am EST. It was also set up to move higher after basing and catching support at the 200 day SMA. Its MACD was improving and the RSI was technically oversold but starting to turn higher. The move Tuesday launched the RSI and moved the MACD near a positive cross. If it can get through the 44.41 Fibonacci and the 100 day SMA it is still technically ready for more upside with resistance near the 50 day SMA and then 47.
So are you still so sure that the rise in the stock was due to hiring an Apple God? How about a look at the $JCP chart.
JC Penney, Ticker $JCP
JC Penney, $JCP had fallen fast from a rising wedge. The signs that it would reverse soon were the RSI under 20, the MACD leveling after a strong move negative, a large extension below the 200 day SMA and it was near previous support from October and November 2010 and January 2011 at 30. I am not arguing that the hiring did not pop the stock, but rather that the stock was ready to rise and the hiring was a catalyst. It now sits at the 100 day SMA just under the 50 day SMA. To keep this stock interesting it needs to clear and hold over both, otherwise it is a sell. Frankly I am more interested in Saks, ticker $SKS, which is just starting to move higher and still has 4.5% to its 200 day SMA and nearly 8% to the 50 day SMA.
Saks, Ticker $SKS
If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.blog comments powered by Disqus
Gregory W. Harmon CMT, CFA, has traded in the Securities markets since 1986. He has held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
- Is Your Portfolio Compatible with the Year of the Goat?
- Benzinga Premarket Talk Thursday Morning
- A Brief History of Trading and the Trading Stocks
- Premium Earnings 2-26-15
- 3 Reasons the Transports May Need to Refuel
- It Was Hard Saying Goodbye to Ruby Tuesday
- Premium Earnings 2-25-15
- Want to Short the US Market, Then Do it Against Germany
- Pancakes, Glue and Technicals – The Story of PerkinsElmer
- Premium Earnings 2-24-15