J.C. Penney (JCP) popped with other retailers in recent days, but the longer-term chart of JCP is still stuck in a sideways trading range. This longer-term sideways range suggests this retailer hasn't figured out how to change the shopping experience to get on track for a growing profit picture. Let's see what else the charts can tell us.
Every chart and every rally is a little different. In other retailers we have highlighted on Real Money today, we saw share prices close on or near their highs on Wednesday, Thursday and Friday. Look closer at Wednesday's action on JCP, above. It closes in the lower half of the range on Wednesday, which is not a strong vote of confidence. On Thursday, JCP fills the gap that was created Wednesday. Other retailers have gaps on their charts that are not filled. JCP has closed above the 50-day and 200-day averages, but the 50-day average line is pointed down.
Now look at the direction of the On-Balance-Volume (OBV) line. The OBV line peaks in March and is generally declining until a turn up (so far) in November. The Moving Average Convergence Divergence (MACD) oscillator signaled a cover-shorts buy signal but is still below the zero line for an outright go-long signal.
In this three-year weekly chart, we see sideways, sideways, sideways. Prices have crossed above and below the 40-week average line several times. The weekly OBV line has been stuck in a sideways range and the weekly MACD oscillator is just hanging on above the zero line. A weekly close above $11 and then $12 would improve the picture dramatically, but I don't anticipate it will happen any time soon.
