First Solar Is Still a Short (FSLR)
Dr. Duru
First Solar (FSLR) is still a short after breaking a six week support line today. Last month, I tagged FSLR as a short mainly because massive insider selling combined with a premium valuation is a huge red flag to me. I pared back some of the position today and will look to add on any near-term bounce. TraderMike beat me to the bunch on a technical review of FSLR’s chart,so I will just add that today’s break below the 50-day moving average(DMA) greatly increases the odds that FSLR will fill its Maypost-earnings gap sooner than later.
FSLR is holding an analyst/investor meeting next Wednesday,so I suspect the stock will not experience much more downside in thenext week (not without some new bad news anyway). Look for FSLR toreassure investors that falling prices in polysilicon are not impactingits business. I will be very interested to find out how much financingFSLR is extending to its customer base.
In related news, each one of the short-term (speculative) solar trades I noted yesterdayblew up in spectacular fashion: Ja Solar Holdings (JASO), LDK Solar(LDK), Suntech Power (STP), and Yingli Green Energy Holdings (YGE). Iguess every solar trader saw the same encouraging short-term technicalsigns that I did and rushed in at once on Tuesday’s open. Each stockopened fast and strong, topped out around mid-day, faded hard into theclose, and violated stops today. The opens were so strong that I didnot even get a chance to think about executing on any of these stocks(I tend to avoid executing trades within the first 30-60 minutes of theday, and I LOATHE chasing anything). Uptrends remain intact, but lowersupport lines are bound to get tested on the more speculative names(like YGE falling to its 50DMA). It now seems even more likely thatEvergreen Solar’s (ESLR’s) late arrival to the solar rally signaled theconclusion of this latest run. It is now FSLR’s turn to leadagain…downward.
Be careful out there!
Full disclosure: net short FSLR; long TAN. For other disclaimers click here.
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.