Panasonic Set Up to Short-Circuit

by Sam Collins | August 23, 2012 2:30 am

Panasonic Corp (NYSE:PC[1]) — 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[2] and consider the number of days that it would take to cover those shorts. For example, Apple’s (NASDAQ:AAPL[3]) 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.


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Trade of the Day Chart Key

Endnotes:

  1. PC: http://studio-5.financialcontent.com/investplace/quote?Symbol=PC
  2. look at the number of shares currently short: https://investorplace.com/2012/08/short-sellers-provide-great-contrarian-trades/
  3. AAPL: http://studio-5.financialcontent.com/investplace/quote?Symbol=AAPL

Source URL: https://investorplace.com/2012/08/panasonic-set-up-to-short-circuit-pc/