Trade of the Day: J.C. Penney Company (NYSE:JCP)

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Today, we’re opening a bearish trade on J.C. Penney (JCP). Things are looking rough for department stores right now. Cleveland Research reported that following growth in May and June, department store sales fell in July as competition from online retailers continue to reduce foot traffic in stores like JCP. This drop in foot traffic to department stores is one of the reasons large mall owners are moving away from department stores as their anchor stores in favor of smaller retailers and restaurants, like H&M and Cheesecake Factory. The decline in foot traffic is also forcing department stores to cut into their margins as they slash prices to move inventory off the rack.

JCP’s stock dropped as the disappointing July sales news came out, but it found some temporary support at $8.50. However, we anticipate this support is going to be short-lived as we move closer to JCP’s earnings announcement on Friday, August 12, before the market opens. Plan to hold this trade through earnings if needed, but you might not have to. Dillard’s (DDS), Kohl’s (KSS) and Macy’s (M) are all scheduled to release their earnings on Thursday, August 11, before the market opens. If these companies have disappointing results, they may drop lower and drag JCP down with them. If that happens, we might be able to lock in solid profits without holding through earnings.

Buy to open the JCP September 9 Puts (JCP160916P00009000).

You can learn more about identifying price patterns and using them to project how far you think a stock is going to move in our Advanced Technical Analysis Program.

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Article printed from InvestorPlace Media, https://investorplace.com/2016/08/trade-day-j-c-penney-company-nysejcp/.

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