A month ago (September 2nd) I said that the market over the past weeks(August) had been a “trendless” and very frustrating market forinvestors and traders alike and that the volatility was very extreme. I also said that the solar sector was “quietly” starting to come alive.
Well things have sure changed and they have changed for the better.The market turned in early September (historically the worst month ofthe year for stocks) and proceeded to produce the 5th best September in history and the best in the last 40 years – what a turnaround!
All of this positive activity – right in the face of general mediaworry over the possibility of a double dip recession, loss of jobs, aweak dollar and China taking over the world (just like Japan was goingto do in the 1980’s). What happened is what I have mentioned many times in the past – all bad news and the market simply turns and just climbsup that “wall of worry” to the utter amazement of our media “experts”.Hint: never watch the financial news – it is all short term speculation based upon things no one couldreally know and more importantly it is usually dead wrong.
What happened to our solar stocks during this incredibly positivetime? While the major indexes moved up an average of 6.8% in Septemberalone, our solar stocks were up 22.3% for the month, approximately 325%better performance!
As any of you longer term readers know I have always said that two of the simplest keys to successful investing are:
- Stocks moving above their 50 day average is a good indicator that, at least for the short term, stocks have changed their direction topositive and
- Looking at the relative strength of all of the solar stockscompared to the market and to each other will tell you which solarstocks are the "strongest stocks" and therefore the which stocks willtend to be the leaders in the next big up move.
At this time 18 of our 22 solar stocks are above their 50 daymoving average and are in strong positive trends. The only laggardsare: Akeena (WEST), Emcore (EMKR), DayStar (DSTI) and Suntech (STP),obviously the market is telling us that these stocks, at least for now,are not ones you would want to count on to be leaders in the nearfuture.
On the other hand the strongest stocks continue to be our “solarseven” from the September 2nd article: JASO, JKS, LDK, SOL, SOLF, SOLRand TSL. These stocks were up and average of 23.8%. These stocks are the current leaders and have been the leaders since the beginning of 2010.As a result, they are more than likely to be the leaders in the nearfuture.
Below is a table of our solar stocks showing their performance verse the major market indexes over three time periods:
- January 2010 to June 2010
- June 2010 to October 7th 2010
- January 2010 to Present (Year To Date)
|Symbol||Current Price||% Change 1/10 – 6/10||%Change 6/1 – 10/7/10||%Change YTD|
The data clearly shows that solar stock started to “wake up” about mid year andsince then they have dramatically out-performed the general market,whereas prior to June they had dramatically under preformed the market.
For the time being solar stocks look great, but keep in mind thatthey are far more volatile (higher Beta’s) than the market in generaland that an investor needs to keep a sharp eye on their activity and set appropriate stoplimits to coincide with their individual level of risk tolerance.