J.C. Penney (JCP) recently gapped up, challenging its present downtrend from $42.50 to $5.00.
GAP REVIEW
On February 27, 2014, JCP gapped up from $6.00 to $7.50 with bullish volume of 112 million. Then on May 16, 2014, it had another gap up from $8.00 to $9.90. This time the gap up was sold into from overhead supply but held in the $8.00 range since the gap up. That day it traded over 96 million shares. If JCP can clear over supply at $10.50 it will be challenging its long downtrend. Also JCP is barely sitting on the daily 200 moving average which can be bullish.
KEY LEVEL
To qualify JCP as a “long” it needs to prove itself and trade over long term supply at $10.50. If it clears $10.50 then $10.50 should become a new demand area and will provide support to JCP to start a nice uptrend.
THE TRADE
Buy any price action over $10.50. Stop under $8.00. Target is $14.25.
