Buying Into First Solar’s Record Short Interest Ahead of Earnings (FSLR)

FSLR short interest at record highFirst 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):

First Solar shares are overbought ahead of earnings

First Solar shares are overbought ahead of earnings

Be careful out there!

Full disclosure: net long FSLR

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