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Five Solar Stocks Turning Up the Heat


Many are on fire with excellent bases on which to build a position.

While much of what's taken place this earnings season can be debated, solar stocks have been lighting up the night with quality top- and bottom-line reports while still flying under the radar quite a bit. From a technical perspective, many are developing excellent bases from which to start building a position.

The overall health of the market, of course, plays into any position a trader puts on. I believe we're overdue for at least a minor pause in the current phenomenal run, so when weighing your potential longs, they need to be taken in light of this. In fact, I'd prefer to see a healthy consolidation at levels below where we now stand. My time horizon for the solar group is months, not days, as I'll give them ample time and long leashes to play out.

While the group has bounced quite a bit off their March lows, they haven't seen the next leg that so many other sectors have. This draws me to them, as traders may be looking for prudent entries into areas that haven't yet gotten too extended. Remember: It's always about risk versus reward. I'll be commenting on weekly charts with a 50 MA since we're looking out at the horizon and not just at the next few days.

First Solar (FSLR)

As mentioned above, it's my opinion that the group demands a long leash when placing stops. Typically, this means reducing position size to keep it well within pre-determined risk levels. As noted on the chart below, First Solar has gone from a high over $300 to a low around $90. While it's a monster drop, trades can bring this chart back even further to see that the recent drop and consolidation may actually be the first healthy correction in this potential future leader.

As a trader, I'm focusing on current charts with double bottom bases off of the March lows. First Solar has gone a step further and put in a third higher intermediate low, as well as 2 higher highs. A textbook case for First Solar would have it holding the significant higher low we saw just a few weeks ago. I've started to slowly move into this name with a stop on clear break of the $139 level. If this doesn't hold, I'll assume the pattern still needs work and I'll stay away.

Click to enlarge


Looking like a coil ready to have a pop, the weekly chart of SunPower is what I look for in a basing pattern. SunPower also hit its 52-week low in the fall of 2008 and made a higher low when the market was bottoming in March 2009. The $20 to $30 range has plagued it for some time, and the current break above $30 is ideal, if it holds. The charts don't show a lot of resistance between here and $50, however the stock needs to catch a bid soon to take out the recent consolidation levels.
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Positions in FSLR, SPWRA, TAN, GEX.

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