Buying Into First Solar’s Record Short Interest Ahead of Earnings (FSLR)
Dr. Duru
First Solar (FSLR) reports earnings tonight, and short interest is at a record high.
Toss in negative news flow and for the first time in a long time,negativity is running extremely high going into FSLR’s earnings. As aresult, I am positioned long going into earnings for the first timeever. This is a continuation of the “bottom-fishing” play I mentioned in FSLR a few weeks ago. I will not even be looking to fade any pop in the after-hours session.
Unfortunately, the long overdue 13% price run-up into earnings hasproduced a poor short-term technical set-up. The stock is nowoverbought and right under resistance from the 50-day moving average(DMA). This is a classic set-up for a short, but I typically defer tonews flow when it comes to earnings. Given the swell of negativity, ifFSLR provides any positive surprises, the stock could immediately shootto the next level of resistance around $143. If instead the stock sellsoff in response to earnings, I will be looking to add to holdings ifthe February lows hold (and selling current puts).
The chart below summarizes the short-term technical set-up (as of ~1pm today):
Be careful out there!
Full disclosure: net long FSLR
Dr. Duru Dr. Duru attended Stanford University, receiving a B.S. inMechanical Engineering, an honors degree in Values, Technology, Scienceand Society, and a Ph.D. in Engineering-Economic Systems (nowManagement, Science, and Society). He has done some independentconsulting in mathematical modeling, slogged through management consultingin product development and technology strategy, and is now pounding thepavement helping companies to improve the monetization of onlineadvertising through analytic software and rigorous analysis.