J. C. Penney Company, Inc. (JCP) is another mall anchor that has been hurt by the explosive online sales growth of Amazon.com, Inc. (AMZN). Many analysts opine that this retailer's long-term prognosis is not bright, but in my opinion, the stock is in play on weakness below $3 per share as an "option on survival." I view buying a stock on weakness to between $1 and $3 per share as an option that the stock will recover, but it is advisable to invest only funds that you can afford to lose completely.
J. C. Penney had a winning holiday shopping period, up by a bull market percentage gain of 59.1% from its 52-week low of $2.35 set on Nov. 8, when Christmas sales began. The stock closed Tuesday at $3.74, down 46.6% over the past 52 weeks and in bear market territory at 49.6% below its 52-week high of $7.42 on Feb. 15, 2017. (See also: J. C. Penney Launches Subscription Box Service.)
The daily chart for J. C. Penney
The horizontal lines on the daily chart for J. C. Penney are the $3.00 threshold, my semiannual pivot of $3.92 and my quarterly risky level of $6.32. Note that the stock is above its 50-day simple moving average of $3.15 and below its 200-day simple moving average of $4.28.
The weekly chart for J. C. Penney
The weekly chart for J. C. Penney is positive, with the stock above its five-week modified moving average of $3.39. The stock is well below its 200-week simple moving average at $7.61, which is also 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 61.65 this week, up from 52.54 on Jan. 5.
Given these charts and analysis, my strategy is to buy J. C. Penney shares on weakness to my monthly value level of $2.37 and to reduce holdings on strength to my semiannual pivot of $3.92, then to my quarterly risky level of $6.32. (For more, see: J.C. Penney Goes Upscale with Pop-Up and Website.)