have mentioned the daily scans I run in this column on several
occasions. In addition to the daily charts, I run the same scans
on a weekly basis with the same set of criteria only I use weekly
indicators instead of the daily ones. I don't take the scans as
the gospel when a stock appears on the bullish or
, regardless if it is the daily scan or the weekly scan. When a
stock appears on any of the lists, it is a starting point. The
appearance on the list brings the stock to my attention so that I
can delve deeper into the analysis and see what is going on with
the charts, what the sentiment picture looks like and look at the
appeared on the weekly bearish scan this past weekend. At first
glance, the weekly chart shows that the stock has just come out
of an overbought status and just hit the upper rail of its trend
channel. Does this mean I short the stock? I wouldn't. At least
not at this time.
The stock has been in an upward trend for almost two years now
and is due for a downward cycle within the trend. But that
doesn't make the stock a great candidate for a bearish play, at
least not to me. I look for a downward sloped trend channel where
the stock his hitting the upper rail. That is the ideal bearish
opportunity-at least from a technical perspective. Once I find
that, then I look at the sentiment and the fundamentals.
Looking at the fundamentals for First Solar stock, the company
hasn't performed all that well in the past few years. The average
EPS growth rate over the last three years has been -13% and the
average sales growth rate for the past three years is only 13%.
The company needs to improve its performance as it seems the
stock has been moving higher based on the push in solar
technology more so than on its performance to date.
The sentiment indicators toward FSLR show that there is some
skepticism toward the
. The biggest source of skepticism comes from the analyst
ratings. There are 20 analysts following the stock with four
"buy" ratings, 12 "hold" ratings and four "sell" ratings. The
leaves plenty of room for upgrades should the company start
Here is how I would look to play First Solar stock at this
time. I wouldn't sell the stock short, but I also wouldn't want
to buy it right now. I would wait for a pullback before buying
the stock. In the meantime, I would
down at the $52.50 level to collect premiums. If the price drops
down to this level and the stock gets put to us, we are buying at
a price near the lower rail and at a point where the stock would
likely be oversold rather than overbought. Selling puts allows
investors to collect premiums on a stock they want to own, but
want to own it at a lower price. Rather than just waiting for the
price to drop, collect some premiums while you wait.
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