JCP, update

jcp sept 8 2013

Our call for JC Penney to move up rapidly is, of course, also based on the “diagonal” pattern. As always it is an ending pattern, in this case a wave 5 of the leg down from $42.5. The base is at $30. This particular diagonal is also near perfect. There may ,or may not, be a triangle within the diagonal but other than changing the positions of the various a-b-c’s, it is not , material to the conclusion. We are up about $2 from the lows. A break now of the upper trend line will propel this stock much higher. If not it will happen anyway but just a bit later. Notice, by the way, that the RSI can be very helpful in determining where the individual legs start and end. Often the low in the RSI precedes the the low point of that particular leg so it gives an advance warning of a coming turn. In this instance it might be possible to argue that the “diagonal” is not just the 5th wave of this structure, but that it actually starts at the $42,5 level as per the chart below;

jcp sept 8 2013 2

The reason we reject this possibility, at least for starters, is that it does not look as good and also because we have to weigh all the possibilities, that is the potential gain against the risk of missing the boat entirely. A break now of the trend line will , for all intents and purposes , negate this possibility.