[JCP] 2nd wave in progress

JCP broke down today in dramatic fashion as expected by my last post on it.   It currently pulled back to the 38.2 fib but the dramatic nature of this first wave down suggests that the ultimate pullback on these shares could be the 50% fib or even the 61.8.  But the new longs could run it up into the 23.6 in an a-b-c for wave B of C before the final pullback into wave C.  Based on the broader markets, this could be an even deeper pullback but at the end of it I think JCP gets left with an inclining double bottom which would be a strong setup for a 3rd wave breakout.

If this pullback to the 38.2 is all that the short sellers can do then it bodes well for new long positions.  In general I think that the weaker the a-b-c pullback is, the more animal spirits will be had by the herd in the next wave up.

Just because the chart failed to break support as expected does not mean the EW model of that being wave 1 up is confirmed.  Not breaking out is the expected behavior after so many failed breakout attempts over the past month.  The shorts saw this thing hit resistance and said "time to ring the register again because this thing can't get out of the way of its own shadow".  Each time that resistance holds it emboldens them.

The confirmation that the worm has finally turned on the shorts will be the break out of the down sloping green resistance line.  That will probably have to happen with some kind of dramatic 3rd wave breakout to "shock and awe" the shorts into covering instead of re-selling the peak.  One a few large shorts cover, the rest of them will get dragged into it kicking and screaming.  They all think JCP will BK and they want to hold all of their gains while it does so in the hopes that they never have to pay taxes because the trade never got closed (even though they got paid already).  This is always the short seller's dream.  But if they get too greedy and demand to pay no taxes on their winnings, it can quickly turn into a nightmare if this thing breaks out into a 3rd wave as I think it will within 2 weeks probably.