On May 16, we mentioned that JC Penny Corporation (NYSE:JCP) broke below the neckline of a head and shoulders pattern and that it looked like the uptrend was becoming exhausted. We noted that the breakdown was a signal of short-term weakness and that many traders would likely watch for a continued pullback toward the support of the ascending triangle pattern near $70. As you can see from the chart below, the bears did indeed send the price down to the support near $70 and it will now be interesting to see if the bulls step back in and push the price back toward the neckline (currently near $79).
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