Monday, June 2, 2008

False Break

I'm frustrated by the lack of follow through on the FSLR breakdown. It hit my number and traded through it by a little but couldn't muster the giddy up to really get crushed. I do have a legitimate vision of a 20 to 50 point hit if we can do it on very strong volume. When I trade these situations it usually works for a nice pop. If you look at LEH however, it fully cooperated and I got "in front" of the $35 # I was looking for by about 30 cents. The volume was there and the bids just vaporized for a true break out to the downside. That's why tight stops are important in case it doesn't work out as planned. Maybe a $5 down day in oil will get me there on FSLR. I made about a point but not the visions of grandeur that I had hoped for,but tomorrow is another day. A couple of decent trades today were JRJC long and UYG short. The financials which I have been dead right on,mustered a rally into the close so we will have to see if it holds. S&P downgraded the group today and Asia kicked off the negative sentiment by announcing that their banks had experienced greater than expected losses do to U.S. sub prime. If you look at the XLF chart I posted Sunday you will see what I'm talking about. It should bounce but if it doesn't, it certainly won't bode well for stocks in general.

What do you guys think? Is solar oversold and ready to rip, or is sending a more serious message implying bad things to come? I'm in the middle.


Scott said...

There's lots of types of solars. There's LDK and CSIQ which do well even on days the market sucks. There's FSLR which apparently seems to be using hazardous waste to make thin film. Some American solars will get lifted or slammed according to next phase of USA solar credits. Europe's solar credits are both a huge driver for sales, and a moving target. Estimated 2009 p/e's are the most hilarious aspect, though - everywhere from YGE (1.61) and SOLF (2.51) to 44 (FSLR).

I bought FSLR puts today though I have calls in CSIQ, STP, JASO and TSL (earnings report Friday).

Johnson's Trading Blog said...

upside - I too am non-committal on solar here but this note on minyanville can't be a good sign for FSLR's future and would cause me to favor it short more than long:

"First Solar Eye-Opener

Interesting insider trading activity is going on in the solar space. Bloomberg reports First Solar’s (FSLR) second-largest shareholder, CEO Michael Ahearn, cut his holdings in half to a little over 3 million shares in May from 6 million at the company’s IPO in November 2006. Some believe it may be a sign that shares of the world’s largest solar company may soon fizzle. Adding to the negative speculation, the company recently announced that its cells made of toxic cadmium-telluride may be banned in Europe, where the company gets 90% of its revenue."


I think some of the solars got ahead of them self and others are rip for a bounce/run.

I went long YGE this afternoon after it's sell-off from 2 t 3 pm. YGE had a CITI up-grade this am and a contract signing on Friday. It held up well along with CSIQ until it tried to sell-off with the rest of the sector and market. I think a $24 to 25 target for a short swing is possible.

Phillip Harris said...

I think FSLR could go either way here. I posted a chart, check it out:

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I am a former hedge fund manager, broker and capital markets dude who now trades for his own account. I love what I do. I will try to post some stocks and an occasional chart that looks attractive for entry.I will also try to point out the idiocy of conventional wisdom and the lack of value added by the mainstream financial media. These postings should not be viewed as recommendations.