Ford (F) overall option implied volatility of 39 is near its 26-week average of 38, according to Track Data, suggesting nondirectional price movement.

JCPenney (JCP) announced better-than-expected cost controls and sales growth. Overall option implied volatility of 41 is near its 26-week average of 41, according to Track Data, suggesting nondirectional price movement.

Options Update is by Stock Specialist Paul Foster of theflyonthewall.com.

Barnes & Noble, the Gap, RadioShack, and Sears -- that may sound like the lineup at the local mall, but in fact they are just a few of the retailers scheduled to step into the earnings spotlight this week. Following last week's disappointing January retail sales numbers from the Commerce Department but strong fourth-quarter reports from Abercrombie & Fitch (ANF) and Nordstrom (JWN), the coming week will offer plenty more data on the sector for investors to mull over.

Walmart

Bentonville-based Walmart (WMT) offered free holiday shipping, closed its Moscow office and named a chief merchandising officer during its fourth quarter. Analysts surveyed by Thomson Reuters forecast earnings for that period to come to $1.31 per share, up from $1.17 in the same quarter of last year. The world's largest retailer also is expected to post revenues of $117.7 billion for the three months that ended in January. That's 3.5% more than a year earlier.

The shares of J.C. Penney Company, Inc. (JCP), first discussed here on April 13, 2009, at a price of $26.52, have meandered near $33 for the past three months, but just look on that sideways action as a chance to scoop-up shares of a battle-tested retailer.

JCPenney's fundamental picture remains encouraging. JCPenney has adroitly adjusted to the U.S.'s frugal consumer era. The retailer has effectively aligned product quality/style with its target demographic, and also prudently and tactfully invested in new brands.

On Thursday, Dillard's (DDS) announced that it plans to form a wholly-owned real estate investment trust. The company will transfer some of its properties to the REIT and then lease back the properties from the entity. The company said that the move may enhance its ability to access debt or preferred stock and improve its liquidity.

The market is currently pricing REITs at rich valuations, and the transaction will allow Dillard's to better monetize its significant real-estate assets. By transferring these holdings into a publicly traded REIT, Dillard's should be able to unlock additional shareholder value. According to Craig Johnson, an analyst at Customer Growth Partners, "the sum of the parts can be greater than the sum of the whole."

Analyst Upgrades

• Diamond Offshore (DO) to conviction buy from sell and Baker Hughes (BHI) to buy from neutral at Goldman.
• Frontier Communications (FTR) to outperform from market perform at Wells Fargo.
• Syntel (SYNT) to outperform from market perform at Wells Fargo, to buy from hold at Deutsche Bank and to buy from neutral at Janney Capital.
• Kulicke & Soffa (KLIC) and Fiserv (FISV) to outperform from perform at Oppenheimer.
• 3M (MMM) to neutral from underweight and Tyco (TYC) to overweight from neutral at JPMorgan.
• Collective Brands (PSS) and Nordstrom (JWN) to overweight from equal weight, as well as Foot Locker (FL) to equal weight from underweight, at Morgan Stanley.
• Amazon.com (AMZN) to buy from hold at Lazard Capital.
• Yamana Gold (AUY) to outperform from neutral at Credit Suisse.

JCPenney (JCP), first discussed here on April 13, 2009, at a price of $26.52, is set to record a memorable year, from a stock chart standpoint, with the close of 2010.

The stock rose to $33 then dropped in bear-hug fashion to about $19 this summer -- coming too close for comfort to the $17 sell/stop loss, before reversing and vaulting above $30 this autumn. The shares currently trade at/near $33, and given the gyrations, now may be a good time to consider taking some profits off the table with JCP.

JCPenney (JCP - option chain) shares are rising today after the company announced this morning that its same-store sales rose 9.2% in November. Analysts were expecting a jump of only 3.1%. Today's high is up $15.39 from a 52-Week Low of $19.42. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on JCP.

JCP opened this morning at $34.50. So far today the stock has hit a low of $33.89 and a high of $35.00. As of 11:55, JCP is trading at $34.59 up 0.89 (2.6%). The chart for JCP looks neutral and S&P gives JCP a neutral 3 STARS (out of 5) hold ranking.

The stock pattern of J.C. Penney Company, Inc. (JCP), first discussed here on April 13, 2009, at a price of $26.52, has not been for the feint of heart, but it appears that the worst of the storm is over regarding this long-time, persevering retail chain.

First the short-term data: JCPenney posted third quarter earnings per share of 19 cents, 2 cents above the 17-cent First Call estimate, on revenue of $4.19 billion, slightly below the $4.25 billion First Call estimate. Same store sales rose 1.9% -- the third straight quarterly increase. Overall, it wasn't a bad Q3 report, but, of course, in today's high-bar investment climate, the street sold the shares, and JCP closed Friday down $1.09 to $31.03.

Shares of retailer JCPenney (JCP) were lower Friday despite a strong Q3 report, as investors are focusing on the revenue miss rather than the earnings beat or its upbeat outlook.

Despite investor reaction, I have a feeling that JCP is going to enjoy some positive action in the future. Will the stock approach the $80 range from 2007? No. But I could see a solid fourth-quarter report and holiday season becoming the catalyst to a push past the $35 region and possibly near $40.

In the world of retail, JCPenney (JCP) has shown it resilience in a highly competitive sector.

The company said its third-quarter earnings increased 63%, as reported in the Wall Street Journal (subscription required). Net profit came in at $44 million or 19 cents per share, up from $27 million or 11 cents per share a year earlier. Total sales edged up 0.2% to $4.19 billion. Same-store sales rose 1.9%. Shoes and men's apparel were the strongest categories.

U.S. stock futures are lower Friday morning amid concern China is likely to lift interest rates to control inflation. Futures for the Dow Jones Industrial Average dropped 66 points to 11,176.00, while futures for the S&P 500 index declined 8.80 points to 1,202.30. Futures for the Nasdaq 100 moved down 16.75 to 2,155.75.

U.S. stocks closed lower yesterday, with the Nasdaq Composite Index losing 0.90%.

Asian stocks closed lower, with the Shanghai Composite index losing 5.15%. European stocks are also trading lower, with the STOXX Europe 600 Index down about 0.6%.

This week, JCPenney (JCP), Kohl's (KSS) and Macy's (M) are the first of the major retailers to report results for the most recent quarter.

Macy's launched an American Express credit card and increased its mobile presence during the fiscal fourth quarter. The analysts surveyed by Thomson Reuters forecast Macy's earnings for that period come to three cents per share, which compares to a net loss of three cents per share in the same period of last year. The Cincinnati-based department store operator is expected to post revenue of $5.6 billion for the three months that ended in October, which is 5.2% more than a year earlier. For the full year, the forecast calls for earnings of $1.50 per share (+6.7%) and $8.2 billion in revenue (+4.3%). Macy's earnings results have been better than expected in recent quarters by a penny or a few per share.

You have got to admit that JCPenney (JCP) has been one heck of an interesting stock. Look at the one-year chart. In a short time, the shares have gone from a 52-week low to almost returning to the 52-week high. Simply amazing.

Back in the middle of August, Trey Thoelcke recorded the dip to the nadir. Bad guidance was the culprit. Continuing the narrative, Joseph Lazzaro wrote a bullish piece on the retailer in the latter part of September. And then, on October 8, Brent Archer came up with an option strategy to take advantage of news reporting a significant stock stake in the business taken on by Pershing Square Capital.

Analyst Upgrades

• JPMorgan upgraded Smith Micro (SMSI) to overweight from neutral and raised its price target to $15 from $9, citing the release of a WiFi iPad with MiFi from Verizon and Apple.
• Jefferies upgraded Whole Foods (WFMI) to buy from hold and raised its price target to $45 from $36, citing checks that indicate sales are accelerating and the company has been focused on expense control.
• Wells Fargo upgraded Ensco (ESV) and raised its price target to $54 to $56 from $46 to $47, citing valuation, the lifted deepwater drilling ban and higher oil prices.
• Gran Tierra Energy (GTE) was upgraded to buy from hold at Wunderlich, citing the company's Moqueta oil discovery as well as other near-term exploration opportunities, and raised its price target to $12.50 from $7.00.
• Chico's FAS (CHS) was upgraded to buy from hold at KeyBanc and set a $13 price target.
• UR-Energy (URE) was upgraded to buy from hold at KeyBanc.

The shares of JC Penney (JCP), first discussed here on April 13, 2009, at a price of $26.52, created jitters among investors this summer, plummeting in bear hug fashion to about $19 from $33, and coming within a couple of points of the sell/stop loss at $17.

However, the selling appears to be over, and although the recent move higher to $24 could be viewed as short-covering, the calculation here is that JCP, a retail survivor, is headed north. Therefore, if you missed the April 2009 buy-in, now would be good to time to consider JCP if you can tolerate moderate risk.