Additional background information from ZeroHedge in the link below. Includes a link to a JCP 2 year CDS chart. "JCPuking All The Way To Penneystock Status" http://www.zerohedge.com/news/2013-10-21/jcpuking-all-way-penneystock-status and a newer article from Barrons: http://blogs.barrons.com/incomeinve...short-and-buy-long/?mod=yahoobarrons&ru=yahoo
Some more stories about JCP: "JC Penney Credit Default Swap Pushes To Record-Wide Levels; Bonds Hit Lows" published 4.05pm http://www.forbes.com/sites/splever...-pushes-to-record-wide-levels-bonds-hit-lows/ http://www.chicagotribune.com/busin...fault-swap-pushes-to-20131021,0,2403952.story "With Shares At 52-Week Low, J.C. Penney Credit Default Swap Price Hits Record-Wide Level" published 12.45pm http://www.forbes.com/sites/splever...it-default-swap-price-hits-record-wide-level/
Tuesday 22 October JCP stock makes a new intraday low at 6.24 and then spikes to 6.82 shortly thereafter. However the bonds decline, and the CDS rises again: https://twitter.com/zerohedge/status/392672160331751424 JCP 1Y CDS +350 at 2000bps chart from Tim Backshall: https://twitter.com/credittrader/status/392672291051417601 http://twitpic.com/dicyeh
Thursday 24 October Fitch Discusses Spiking J.C. Penney (JCP) CDS Spreads http://www.streetinsider.com/Credit...g+J.C.+Penney+(JCP)+CDS+Spreads+/8808088.html **** Today is unusual in that JCP bonds are generally stronger, however JCP stock is down 4% to $6.75
This might be the reason for the 8% decline in the stock today: https://twitter.com/zerohedge/status/408631948022517760 Value Investors Club new write up on JCP: "JCP: Short. Target Price, 0"
I'm going to be boring and just continue with my "short and hold" strategy. My initial entry price was about $16, and I added somewhere above $9. I'll let everyone else bother with attempts to catch a 10% bounce here or there.
I bought JCP last Friday (the 25th) at 9.21. I've been watching it for a while and put it on my buy watch in May. It seems to have put in a bottom and it is also rising on days when the overall market is selling off. The entire retail sector has been lagging the market for a while, and I think it may have bottomed as well.
If it tags $10 and begins to pullback (to shake out the breakout buyers) then how low can it go and still remain a buy? Logically 8.40 will stop out a lot of longs. If the public gives up their long shares easily then it could see further new highs. Does this scenario sound about right?
If it were to spend too much time below 8, I will throw it out. Otherwise I'm holding for the long haul. Back in December it hit 10, then quickly sold off all the way down to 5. Trading was volatile in Feb/Mar, but then calmed down and has risen slowly. I like that slow rise and the fact that the stock holds up well on when the overall market is bad.