Panasonic Corp (NYSE:PC) – Global macroeconomic weakness and a lower demand for flat-screen TVs are conspiring to limit the growth of Panasonic. The stock is in a pronounced long-term bear channel, which turns aside rallies at its bearish resistance line (red dash line) and its 200-day moving average. The recent rally from $6.15 turned down from its 50-day moving average (blue line) and bearish resistance line at $7.25. But is PC a good short-sale candidate?
A way to evaluate a stock with falling sentiment is to look at the number of shares currently short and consider the number of days that it would take to cover those shorts. For example, Apple’s (NASDAQ:AAPL) short interest could be covered in a day, thus it is not a good candidate for a short sale. But for PC, it would take 6.28 days to cover an increase, up from 3.82 in June — in other words, sentiment is rapidly falling.
The next low could be south of $4. Sell PC short at the market with an objective of under $4.50. Short-selling is a speculative technique that is more risky than normal. A stop-loss order should be entered to protect against unlimited risk, and please check with your broker for any unusual margin requirements.