The Panasonic Corporation (PCRFY) has lost a lot of market share in 2015 due to a slump in Japanese electronics, particularly in the smartphone and Smart TV sectors. Yet, they are still one of the most prolific and diverse companies in Japan. They are a global producer and exporter with more than two hundred thousand employees and over 500 subsidiaries.
The electronics giant recently announced that it will stop making lithium-ion batteries at its factories in Beijing in order to cut more than one thousand jobs. This move is to help them focus on higher-margin products such as electric car batteries and to increase their profitability once more.
It seems to be a wise move and just the beginning of a shifting focus. The company is even splitting costs with Tesla for the construction of the biggest lithium-ion battery factory in the world: The Gigafactory in Nevada, USA. This lucrative partnership is expected to help turn the company’s share price around – more on that in due course.
The Nikkei enjoyed a few strong years fuelled by the Bank of Japan (BOJ), which is still buying almost all JGB’s (Japanese Government Bonds). Panasonic is a Nikkei 225 component. Curiously, however, the company’s stock has been on a downward trend since 2000 when technicals showed a double top was made at around ¥3000/share.
The whole structure from the ¥3000 mark seems to be corrective, and more importantly, it is channeling really well. However, the end of 2012 seems to have brought a move that looks to have the potential to break to the upper side of the channel – even if the first attempt failed.
Right now, Panasonic is hovering around ¥1300/share, and the upper side of the channel is around the ¥1800 level. This means on the lower time frames we should see a corrective move that must be a reversible one, especially if the general trend is about to change. The key ¥1000/share level should be the pivotal number, and judging by the fact that it has proven to be strong support in the past, we can make an educated guess that it will hold its own again.
Therefore here we are, with a bullish longer-term perspective and a bearish short-medium term one. I am favoring a put option from the current 1300 area, with a one-month expiration date. The assumption here is that the price will move to the 1000 level. That would be a nice place for a call option with a one-month expiration date as well, and if the call option expires out of the money, another one should be taken, a bigger investment this time but again with a one-month expiration date.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
