IFC Markets - Analytics

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Technical Analysis #T-6502 : 2015-12-08

Amount of fine announced

The Japanese stock market regulator (SESC) announced the amount of fine to be paid by Toshiba for wrong accounting. The penalty comes to 7.37bn yens ($59.8mln). That is a good deal of money but Toshiba is able to pay it out. We may assume that the row will gradually abate. Will it support the stock price growth? And will the traders’ saying “sell rumours – buy facts” work in this case?

The Toshiba stocks slumped 41% since the start of 2015 while Nikkei 225 index advanced 13%. Meanwhile, the recent company’s statement for April-September this year has shown the improved financial standing. The operating loss fell to 90.5bn yens from 228.4bn yens in the same period of last year. In the first six months of the present fiscal year the company got the net profit of 37.3bn yens against the loss of 15.3bn yens. This happened due to the non-operating income from the securities sell-off and the reduced expenses. As part of restructuring, Toshiba sold to Sony its image sensor business and is on track to derive of several other unprofitable enterprises. It is hard to tell yet whether the restructuring is successful. The company weighs various options on collaboration with Fujitsu and Sharp.



On the daily chart Т-6502: D1 is in downtrend since the start of the year. Late November the quotes hit a 3-year low. Now they are correcting upwards. The Parabolic indicator and MACD have formed the buy signals. The Bollinger bands have widened which may mean higher volatility. RSI is neutral, no divergence. The bullish momentum may develop in case the Toshiba stocks surpass the last fractal high at 310.2. This level may serve the point of entry. The initial risk limit may be placed below the Parabolic signal and the 3-year low at 280.7. Having opened the pending order we shall move the stop to the next fractal low following the Parabolic and Bollinger signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. The most risk-averse traders may switch to the 4-hour chart after the trade and place there a stop-loss moving it in the direction of the trade. If the price meets the stop-loss level at 280.7 without reaching the order at 310.2, we recommend cancelling the position: the market sustains internal changes which were not taken into account.


Position Buy
Buy stop above 310,2
Stop loss below 280,7

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