Investors are fired-up about solar stocks again.
After an embarrassing first half of the year, most solar
stocks have been stable since July. That stability came as a
relief to many green investors who have endured share losses of
over 90% in certain cases.
I'm a big believer in solar as an investment. It's clean and
panel prices are starting to come down as input costs decline.
However, facing a worldwide budget crisis and a general lack of
funding, solar investing for the long term is a risky endeavor.
Though the buy and hold strategy is a risky approach, solar
stocks may bring quick profits to a savvy trader.
Many former solar stars such as
Canadian Solar (
and accumulated a tremendous short interest. This means that an
abundance of investors short sold the shares, creating a gem of
an opportunity to take a counter trade that profits as short
sellers rush to cover open positions.
My favorite trade to make from the sector is buying
SunPower Corp (
stock, which is recovering from a fall that took the shares down
from $9.54 to under $4 this year.
Though its price has been volatile lately, the SPWR chart shows a
series of higher lows formed since August. The higher lows
indicate buying pressure is increasing because investors are
willing to accumulate at gradually higher prices.
And bullish traders should take note.
SPWR has some resistance near $5. However, I expect this will
break before November. Once that resistance zone breaks, look for
a quick ride to the flattening 200-day moving average (orange
line), which is a full 20% higher than current prices.
Traders can initiate a long position anywhere under $5 with a
stop loss at $4.25. Though the 200-day moving average is my
primary target, there is a great chance that SPWR can rally 35%
higher and to a more formidable resistance area near $6.20.
This chart shows the price of
shares along with an important moving average to
Equities mentioned in this article: FSLR, CSIQ,