This is an excerpt from my Nov. 27, 2012 research for Hewlett-Packard (HPQ):
"HPQ weekly or weakly, look before you decide. The 2002 low was at $10.75 and it's not far from that now.
HPQ has had a few long-term oversold on weekly charts before, and here are the results:
- 2002 rallied 144%
- 2004 rallied 232%
- 2010 rallied 32%
- 2011 rallied 39%
- 2012 rallied xx?
The average return was 111% and that would get HPQ to $24.04 from the recent $11.35 low.
This time is different? Ask yourself, what did you think in 2002, 2004, 2010 and 2011.
If you thought you could not own it then, then is it worth the risk to $10.75 ... not a day trade."
Now that brings us to J.C. Penney (JCP). I know you might be thinking that this time is different or this stock is different and you might be right.
Let's explore the technical facts of JCP, as it is down 48% from the September top of $14.65. JCP is down 17 of 19 weeks since that September top.
I would look to buy some JCP with a close this week above $7.86 (last week's close) and look to add with a close above $8.51 (last week's high).
Can an outside reversal week be coming? Way too early to make that call now, but I try to alert readers to what might be coming ahead of time.
JCP has not had many long-term weekly signals over the past 18 months. The last long-term overbought weekly signal came in February 2012 and the stock fell 55%. The last long-term oversold weekly signal came in July 2012 and the stock rallied 70%.
JCP traded as low as $7.59 this week and is attempting an early bounce today that should not be bought yet.
With the JCP 2009 low at $13.71 and the 2012 high at $43.18, it gives us a 1.236 retracement level at $6.75 for the next support level.
At the time of publication, the author had no positions in any of the securities mentioned.