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Did Bill Ackman Dump JCP At Exactly The Wrong Time?

  • Written by Syndicated Publisher No Comments Comments
    August 30, 2013

    This week it was reported that activist investor Bill Ackman and Pershing Square had sold down all of their remaining stake in JC Penney (JCP), some 18% of all listed JCP shares. Unfortunately for Bill Ackman and his investors this sale of JCP reportedly amounted to a loss of between $500 million and $1 billion – ouch!.

    Over recent years Bill Ackman his been involved some unfortunate investments with the likes of Borders, Target and more recently Herbalife which also involved a very ugly public spat with counterpart activist investor Bill Icahn.  You can read more on Bill Ackman’s activities in this Bloomberg article Bill Ackman’s Admirable Antics by William D Cohen.

    From my perspective, below I have outlined the technical analysis case for JC Penney which indicates that the disposal of these shares looks likely to have taken place around what may turn out to be significant and possibly multi-year lows should support immediately below hold, as we expect it might.

    And whilst our trend analytics models are all currently pointed towards bearish for JCP, the stock does has many similar technical characteristics to what Apple Inc. (AAPL)  did in May this year (highlighted to subscribers at the time) and  just preceding it’s recent 30% rally.

    If our trend analytics models do improve to the point where they confirm a new intermediate bullish trend has commenced in JCP from here, then not only would it indicate that a new multi-month powerful rally was underway but also that Bill Ackman and his investors have unfortunately sold into what may turn out to be important price lows.

    So whilst the technical bias for JCP remains bearish according to our analytics models at present which means there is no reason to be bullish just yet, should that situation reverse then our paid subscribers will be immediately advised.

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    [youtube]http://youtu.be/xtM-mw2EJ1U[/youtube]

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    Paul Thomason

    Editor, Elliott Wave Market Service

    Images: via Flickr (licence attribution)

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