Are solar stocks beginning to peak out from behind the clouds? The answer is a definite maybe. While the fundamentals haven’t changed much, the technical look tells us some good fortune may lie ahead. However, before we jump in, we must consider something. We have talked often lately of possible sector rotation in the markets, but what we need to remember is that when bull markets are near the tail end of their run they start to dig deep into to forgotten groups and underperformers as they can no longer push the leaders higher. So what do we have here? An new group that may help keep the bull run going or the effects of tiring market? The answer is, we really don’t know yet, but as long as we are cognizant of the possibilities of the risks going forward, we can proceed appropriately. If we think we can make some money and find good looking set ups that fit our methodology we will take our shots.
Our main theme here is to find strong, trending stocks that are concentrated in the top performing groups. Be we also have a few other strategies and one of them includes trying to spot stocks/sectors that may be undergoing a change in trend. We look for stocks/sectors that are coming off multi month, or better yet multi year lows. Being able to find these changes in character early gives us a great chance at latching on to a big winner. The downside to this is that it can be very difficult to decipher a possible trend change from a false start. Here is a look at sector as well as a stock that we may very well be interested in taking a position in.
We can see in this last chart that CSIQ made two earlier attempts back in OCT and FEB to rocket of a bottoming pattern but was never able to follow through. However, today we see that the stock followed through with a nearly 4% gain. This gain comes on the heels of a pullback bar yesterday, a day of trading that exhibits a lower high and a lower low. This gives us a trigger for a long entry. We did not grab this stock today but if the stock offers us an opportunity tomorrow somewhere between $15.65 and $16.25 we would consider a long position, all else being equal. Some other stocks in the group exhibiting similar behavior that we are also targeting include FSLR, SEDG, RUN, SPWR.