Mall anchor J. C. Penney Company, Inc. (JCP) reports earnings before the opening bell on Friday with a stock that traded as low as $2.35 on Nov. 8, 2017, as an "option on survival." Investors buying a stock trading between $1.00 and $3.00 should consider this position as an "option on survival," as the funds used are totally lost if the stock becomes worthless.

The stock closed Wednesday, Feb. 28, at $4.33, up 37% year to date but down 8.8% from its 2018 high of $4.75 set on Feb. 27 on a spike higher following the pop for shares of fellow mall anchor Macy's, Inc. (M). With the stock above $3.00, J. C. Penney is an option survivor. (See also: J. C. Penney Stock Offers an 'Option on Survival'.)

Analysts expect J. C. Penney to report earnings per share of 45 cents to 50 cents before the opening bell on Friday. The retailer reportedly closed about 140 stores last year to cut the poorest-performing properties. Full-year earnings should be higher, but revenue remains under pressure.

The daily chart for J. C. Penney

Daily technical chart showing the performance of J. C. Penney Company, Inc. (JCP) stock

Courtesy of MetaStock Xenith

J. C. Penney has been below a "death cross" since Nov. 14, 2016, when the stock closed at $9.52, which is not shown on the 52-week chart. A "death cross" occurs when the 50-day simple moving average falls below the 200-day simple moving average, indicating that lower prices lie ahead. This tracked the stock to its 52-week low of $2.35 set on Nov. 8. The stock is above its 50-day and 200-day simple moving averages of $3.67 and $3.97, respectively, but if the convergence continues and the company has a positive reaction to earnings, a "golden cross" is likely by the end of March. Note that the stock is above my semiannual pivot of $3.92, which has been a magnet year to date.

The weekly chart for J. C. Penney

Weekly technical chart showing the performance of J. C. Penney Company, Inc. (JCP) stock

Courtesy of MetaStock Xenith

The weekly chart for J. C. Penney is positive, with the stock above its five-week modified moving average of $3.84. The stock is well below its 200-week simple moving average at $7.46, which is the "reversion to the mean," last tested during the week of Dec. 16, 2016, when the average was $9.70. The 12 x 3 x 3 weekly slow stochastic reading is projected to rise to 70.81 this week, up from 66.12 on Feb. 23.

Given these charts and analysis, investors should buy J. C. Penney shares on weakness to my semiannual value level of $3.92 and reduce holdings on strength to my quarterly risky level of $6.32. (For more, see: J. C. Penney Launches Subscription Box Service.)