NOV13 0932PST. When the Financial Times carries a story with the following tantalizing statistic -- that JC Penney (JCP) has a short interest level at 40% of the firm's outstanding shares, ranking it the second most shorted stock in the S&P500 -- there is surely a contrarian trade in the making.
JCP shares are in a very steep capitulatory sell-off; blood flows in the streets. More to the point, the shares are approaching support from a two-year price channel, which predicts support in the $17.4 area. If taking into account a two-day island reversal from August 2011, which briefly penetrated the channel's lower support line, support might be expected at the lower price of approximately $16.3.
The four-year chart of JCP follows.
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| JCP. Nov 2008 to present. Daily candles. |
