JCP - systemically failing

J C Penney (JCP) saw a very severe collapse wave in the afternoon, closing -10.2% @ $14.60. The snap lower was caused on news that a commercial lender (CIT) has stopped supporting companies delivering to JCP stores. Long term price trend remains...dire.


JCP, 5min

JCP, daily

JCP, monthly, 20yr historic

Summary

With the main market failing to break into the sp'1700s..and instead seeing downside to sp'1685, it was no surprise that JCP fell, but with the news that a key industry lender has cut support to companies associated with JCP, the stock saw a pretty severe latter day collapse of 10%.

**See Zerohedge story for further details..and the usual 'feisty' comments.
--

Bigger trend is one of systemic failure

Now, there is little reason why the maniac bargain hunter/knife catchers won't be buying JCP across the next few days, but still, the monthly charts are clear..JCP is in dire trouble. It is pretty amazing to recognise that JCP was $40 just over 18 months ago, never mind the $70s in 2007.

From a chart perspective, JCP looks set to challenge the 2009 low of $12.55. If that fails to hold...and I'm guessing it will FAIL, then JCP will then proceed to the 2000 low of $7.17..if not all the way to zero.

JCP faces massive competition, within an industry that has always struggled with low profit margins. Considering the 'economic recovery' - as weak as it has been, JCP is still struggling to stay afloat.

see key stats @ Yahoo! finance

From a balance sheet and profit-margin (lack of) perspective, JCP is simply...dire.


Sears...not much better than JCP

The same 'systemic' issues are arguably also inherent within Sears (SHLD), it remains to be seen whether Sears will implode before JCP. I have to think, it will be rather amazing if either JCP or SHLD are still around after the next business cycle peaks in 2015/16.
-

Regardless, from a trading perspective, JCP is sure to see some wild price action in the coming days. 

FB - testing the IPO level

Whilst the main market is holding together with moderate gains, Facebook (FB) continues to soar, climbing another 6.2% @ $37.63 - having peaked @ $37.96. It has taken FB an embarrassing fourteen months to get back from what was a debacle of an IPO.


FB, daily

Summary

Underlying pressure remains strongly to the upside, although there can't be that many shorts left to cover now.

We're probably seeing renewed waves of 'chase it higher' buyers...perhaps arguably 'panic buyers', for what is a stock still surrounded by media hysteria.
--

As many have noted - even on clown finance TV, as FB moves back to the $38 IPO, there is likely to be increasing waves of selling as the bagholders from May'2012 start to offload for breakevens.

FB remains one to watch...if only for pure entertainment purposes.

AAPL - upside to the 200 day MA

Whilst the main market indexes saw moderate declines, Apple (AAPL) was one of the bright spots, closing +$7 @ $448. Near term trend is bullish, and a test of the declining 200 day MA in the $470s looks very viable within the next 3-10 trading days.


AAPL, daily

Summary

Another 1.6% higher for AAPL, and its continuing a pretty strong run since the late June low in the low $390s.

If the main market does see some significant weakness - back into the sp'1600/1550 area in late Aug/early Sept', it will be interesting to see if AAPL can hold the very important mid April low.

Best guess...yes. Baring a secondary wave lower in Oct/November, AAPL looks to have a good chance to close the year back in the 500s.

Relative to the main market..AAPL is grossly mispriced.