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What: Shares of J.C. Penney (NYSE:JCP) were recovering further today, gaining as much 11% after the company showed positive momentum in its third-quarter earnings report.

So what: By any normal standard, this was a terrible quarter for the retailer, as it posted an adjusted loss of $1.81 per share, and a 5.1% decline in revenue to $2.78 billion, both slightly missing estimates. Things had already been so bad at Penney, however, that investors were rewarded by the progress seen over the three-month period. Though same-store sales fell 4.8% in the period, comps went positive in October, increasing 0.9%, and CEO Myron Ullman said that comps and gross margin improved sequentially through each month. He expected the pattern to continue in the fourth quarter.

Now what: With this report, J.C. Penney appears to have finally hit rock bottom after former CEO Ron Johnson's wayward experiment in rebranding the company last year turned into a disaster. Penney shares are already up 50% in the last month, buoyed by Ullman's earlier statements that comps had turned positive, and the number of hedge funds taking stakes in the department-store chain. While shares may return to the teens, where they've traded most of the year on the continuing recovery, long-term, J.C. Penney still looks broken. Sales have stopped sliding simply because Ullman returned to the company's former strategy, but the chain was only mildly profitable then. Penney may be moving in the right direction, but any chance of profitability seems years away.