Will the Sun Rise on Solar Stocks this Week? | Bulls on Wall Street

Will the Sun Rise on Solar Stocks this Week?

I tweeted out last week that I was starting to watch solar stocks again.. well, with Friday’s sell-off, I’m REALLY watching them now.

In this post, I’m going to take a quick look at a few Chinese solar stocks and outline what I’m looking for.  Why Chinese only?  Despite talk in the market Friday that China might try to slow down growth this year, I don’t think that applies to clean energy.  They are spending sick amounts of money in this area and are not giving any indication that it will stop anytime soon.  For me, that means trading opportunities and that’s exactly what I’m looking for.

The list: CSIQ, JASO, LDK, SOL, SOLF, STP, TSL, YGE

First, let’s just state the obvious – solar stocks have been destroyed this month on heavy volume – classic falling knife and you know what to do with a falling knife, right?  Get your hands out of the way!  Wait for the knife to hit something and eventually break. 

CSIQ – On the weekly chart, CSIQ has MA20 support at 21 and horizontal support at 20.   On the daily, MA100 sits at 20.76.  The daily also shows some support at 20.  I’m looking for what happens if we get a fall to the 20.5 – 21 range.  This would be favorable technical bottoming area and possible entry for swing long. With all of these cliff divers, a day or two of confirmation support wouldn’t hurt before taking a position (reduce the risk).  Once I do participate, I will likely scale in with small buy blocks as it moves up. 

JASO – Unlike CSIQ which still sits a little above support,  JASO is right smack on support now.  We have both MA100 support and horizontal support.  And, of course, all of the indicators show oversold signals.  I’m looking for an entry in the 4.50 range if it holds this area and the buy interest starts showing up .

LDK has less support than the others, but is sitting on satisfactory horizontal support levels at 6.50.  (seeing the trend yet?)

SOL is currently sitting on horizontal support at 4.60 (not super strong, but does exist) and ascending trendline support off November lows.  Unlike the others mentioned above, this one still has room to the downside, but I’m watching this support level.  Turn time or next leg down? 

SOLF –  The theme continues.  Support for SOLF sits at 7.00.  

STP – This one is interesting.  Wow – what a fall from 18.5 to 13.  Has the knife finally hit the ground? It may happen this week (what I’m hoping for) or it may happen some time down the road.  Check out STP’s fall in August.  Very similar to the current pullback.. Also notice that it reversed at 13 and quickly moved to 17.5 – that’s a 34% move.  If solars move back up, STP will have my interest.

TSL – probably the least volatile of the group.  Notice the nice steady move up on the daily chart before falling off the cliff.  I probably won’t trade this one, but a good one to watch for indications of solar recovery in China.

YGE – Good ‘ol YGE.  I’ve made some great profits here.  I really like this chart.  I’m watching it right here for a possible reversal.
 
 

Summary – you get the point by now – solar stocks have pulled back significantly, but most are now sitting on support levels.  This is when I get excited – en entire sector moving together and testing levels together.  I’m hoping for a reversal back up with confirmed volume.  I’ll let the move happen before I take a position.  If solars don’t hold these levels, we could see another heavy drop (possible short opportunities).  Check out the attempt by YGE to hold MA50 last week. Once it failed, it really failed.  Again, solars are a falling knife right now, so it would be prudent to not rush a long position.
 
Solars – worth watching.

Happy Trading.

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