In May of this year I wrote a post about How to Make an Investment Decision.
I wrote “Relying on your own judgment rather than using an adviser can be wise…….You’ll find that the more you use others for advice the more you are dependent upon them. When you accept someone else’s opinion, they may change their opinion and brokers are reluctant to put out sell orders especially when they just made a buy recommendation. You need to be the person who sets the criteria as to when you should sell an investment.”
When I discussed JC Penney back in May, there weren’t a lot of people jumping on board, the stock had declined from a high in of $87 in 2007 and in February of 2014 the stock hit a low of $5.
When making an investment decision I noted that “I choose to use a scan that looks for stocks that have hit 120 day new highs, this can be done from “easy scans” on TC2000. Once the scan is completed you’ll have a list of companies. I look for companies that have been in an accumulation phase……..(An area of accumulation forms where informed sources buy a stock with the intention of marking up the price. At the same time less informed sources tend to sell in that same area of accumulation. It is usually identified by an increase in volume on upward advances and a contraction of volume in downside moves).
My recommendation on JC Penney came out when the stock was at about $8.75.
There is a technical concept that JC Penney recently achieved, it is called a “Jump Across the Creek”.
Robert Evans from the Stock Market Institute, of which I was a student, has a wonderful description of this jump and the backup to the creek:
“Are We Backing Up To The Creek?”
“The story goes like this. A little boy is walking across a field when he comes to a small creek. Not wanting to get his feet wet, he realizes he must jump over the creek. In order to get a running start he walks away from the creek, turns around and sprints towards the water’s edge. He then jumps and easily clears the creek. His momentum takes him past the creek and he has successfully crossed over without getting wet.
The boy is so pleased that he walks back to look at his handiwork before continuing his journey across the meadow.”
The creek bank is simply a point of resistance. It is the price where certain investors or traders choose to sell the stock. They may be shorter term traders taking profits or longer-term investors, who have purchased at a higher level, and are now anxious to get out even or at a small loss. A move above that zone (creek) has significant meaning for a technician. It is a point where supply has been overcome and price movement to the upside is much easier.
J C Penney stock has jumped the creek and successfully backed up the creek and is now moving forward. So, what should our price objective be?
The use of point and figure charts gives us some idea.
The price objective remains at $17 a share.