I have to break into our series on the Dow Transports (TRAN) to report on the completely unnecessary billion dollar losses investors are taking on J.C.Penney (JCP – NYSE).
JCP just announced a terrible quarter, prompting the company to suspend their dividend in an attempt to resurrect their balance sheet. This news chopped JCP shares by 16.71% in a matter of hours.
But someone knew this was coming.
We asked Bottarelli Research Newsletter readers weeks ago to apply our Sell Stack test to their retail stocks. Anyone who performed this critical test to JCP would have seen that the stock had entered Charles Dow’s “Distribution Phase,” when the wise guys are unloading their shares just before a stock crashes.
Fortunately, this test can still save investors from billions in additional losses.
Trading Tip: JCP’s technical chart indicates that the breakdown may not be over yet. JCP could fall to its next support level at $22.93.