First Solar: Expecting a Sell-Off 26 comments
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Four weeks ago in my weekly newsletter EPIC Insights, I highlighted First Solar (FSLR) as an ideal stock to buy. I felt the markets were preparing to move higher and that solar companies would be beneficiaries of the Obama administration's efforts to foster an alternative energy industry. Also, most importantly, a review of FSLR's chart showed clear technical patterns that pointed to a move higher.
Reviewing the prior 18 months, FSLR moved higher in a fan pattern (A, B, and C), cascaded to a low that surrendered the entire bull market gain, and then rebounded. In moving higher from a classic triangle pattern (green arrow), FSLR showed signs of approaching the 200-day moving average (MA).
A month later we show a small profit on our position. Although I always enjoy profits, I am becoming concerned with this position. Over the past month, uneven movement in the stock has resulted in another triangle pattern forming. This time, instead of a decisive move from the tip of the triangle (back arrow), we see sideways action. I am impressed that the shares have consistently found support at the 50-day MA, but I question whether that support can last. In a bear market, once resistance is broken, prices plummet.
With FSLR, each time we see the share price drop toward the 50-day MA, we wonder whether this is the time the level will fail to hold and prices will break materially lower. I am convinced that time will come and have no desire to stay in the shares to watch it happen. We always want all of our trades to show large profits, but in the markets, walking away when uncomfortable is often the best decision. For that reason, I recommend closing our long position in FSLR as this week's technical trade.
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Other points: 1) Even a Baboon can draw support/resistance lines and Gann Fann lines. 2) FSLR is in a sideways consolidation pattern and has been quite stable in the last 2 months. ENER & SPWRA both showed good earnings and FSLR's panels are more efficient than ENER's, so it is likely FSLR will get a nice pop on earnings. 3) After a long sideways consolidation, most technical analysis becomes meaningless (stochastics, Macd, OBV, Bollinger bands). In particular Gann Fanns are one of the worst tech analysis tools, having no more predictive value than astrology. The fact that the author believes so speaks volumes about his authority to speak on this subject!
Final Point: Why would anyone go to the trouble to post his analysis on a stock, posing as a "good samaritan" helping YOU to prevent losses. More likely such posters want to accumulate shares by flushing out weak hands.
Never trust a blowhard... FSLR will be just fine.
seekingalpha.com/autho...
You may see FSLR selling for 10x earnings.
1. Change of rules in european markets, some companies in Spain and Germany are in technical stops and some are shutting dowm.
2. New producers of 99.99% silica are now in the market, reduction in prices are pushing down producers with high stocks levels plus contracts with fix (higher) price for this year.
3. New technology in classic panels (dyes, reflective layers and other innovations) are making them very competitive in comparison with FSLR.
4. The green new deal was discunted in the stock price in last december.
5. Chinese producers are reducing prices and now in Europe you can install PV at €3.2 por Watt ( 7 in 2007), that are in my opinion some of the reasons why this market and stock is not so easy right now as it seems.
On Feb 16 09:22 AM D. McHattie wrote:
> Sean, I realize you are making this recommendation for purely technical
> reasons. But shouldn't we at least lift our heads up and take a
> look around at non-technical factors?
>
> Specifically, it seems to me that FSLR will benefit greatly from
> this latest stimulus package. There is plenty of money in this bill
> for alternative energy and our new energy secretary has specialized
> expertise in solar. 'Buy American' efforts would also benefit FSLR,
> being that it is headquartered in Tempe Arizona.
>
> Anyway, thanks for the warning.
They are two completely different products that rarely compete as options for sites. FSLR is predominantly used for utility scale ground mounts while ENER's (uni-solar) product is strictly for rooftops as it is similar to traditional roofing materials. Kind of funny that your critique of the author undermines your own "analysis" in point 2.
If you are a real "fund manager" God help your investors.
On Feb 16 01:16 PM Fund manager wrote:
> This is the most shallow technical analysis I've seen in a long time
> ("I 'think" the market is heading lower." Oh really? Well I think
> the market is going sideways, but FSLR will show relative strength
> in that market.
>
> Other points: 1) Even a Baboon can draw support/resistance lines
> and Gann Fann lines. 2) FSLR is in a sideways consolidation pattern
> and has been quite stable in the last 2 months. ENER & SPWRA
> both showed good earnings and FSLR's panels are more efficient than
> ENER's, so it is likely FSLR will get a nice pop on earnings. 3)
> After a long sideways consolidation, most technical analysis becomes
> meaningless (stochastics, Macd, OBV, Bollinger bands). In particular
> Gann Fanns are one of the worst tech analysis tools, having no more
> predictive value than astrology. The fact that the author believes
> so speaks volumes about his authority to speak on this subject!<br/>
>
> Final Point: Why would anyone go to the trouble to post his analysis
> on a stock, posing as a "good samaritan" helping YOU to prevent losses.
> More likely such posters want to accumulate shares by flushing out
> weak hands.
>
> Never trust a blowhard... FSLR will be just fine.
No need to lecture me on the differences between ENER & FSLR. I've been an ENER investor for 4 years. My point was that if ENER is able to do well in this env't, so will FSLR. Contrary to what you said, FSLR does do commercial & residential rooftop applications as well.
As for your second point, my critique of the author was based on his premise that he knows technical analysis, but the essence of his techincal analysis was that he "felt the market was going to go down." Not exactly technical analysis. And the laughable use of Gann Fans!!!
On Feb 17 11:11 AM Fred W wrote:
> Comparing ENER's product with FSLR's is a classic apples to oranges
> fumble.
> They are two completely different products that rarely compete as
> options for sites. FSLR is predominantly used for utility scale
> ground mounts while ENER's (uni-solar) product is strictly for rooftops
> as it is similar to traditional roofing materials. Kind of funny
> that your critique of the author undermines your own "analysis" in
> point 2.
> If you are a real "fund manager" God help your investors.
FSLR's production is spread out almost evenly between Ohio, Germany and Malaysia. Further more, the Ohio site actually has the lowest cost of module production--according to recent comments by Michael Ahearn. I suspect this strategy is more related to being near end markets than to locate in "other low cost environments."
You sure hit that nail on the head. FSLR closed down today 7.49% ($10.82 + $0.38 after hrs.) ouch.
I had a front month UCO straddle myself.
zoom, zoom, zoom, that NAV price moves fast!
Found keeping an eye on the OVX (Oil volatality index) helps with commodity stocks like FSLR too....or just spot oil price of course....
Yet, here you are telling everyone "FSLR will be just fine"!!! They have been stable for two WHOLE months now, wow, maybe I should dump my savings into FSLR?? Perhaps your fund owns shares and you are trying to prop up the price!!??!!
On Feb 16 01:16 PM Fund manager wrote:
> This is the most shallow technical analysis I've seen in a long time
> ("I 'think" the market is heading lower." Oh really? Well I think
> the market is going sideways, but FSLR will show relative strength
> in that market.
>
> Other points: 1) Even a Baboon can draw support/resistance lines
> and Gann Fann lines. 2) FSLR is in a sideways consolidation pattern
> and has been quite stable in the last 2 months. ENER & SPWRA
> both showed good earnings and FSLR's panels are more efficient than
> ENER's, so it is likely FSLR will get a nice pop on earnings. 3)
> After a long sideways consolidation, most technical analysis becomes
> meaningless (stochastics, Macd, OBV, Bollinger bands). In particular
> Gann Fanns are one of the worst tech analysis tools, having no more
> predictive value than astrology. The fact that the author believes
> so speaks volumes about his authority to speak on this subject!<br/>
>
> Final Point: Why would anyone go to the trouble to post his analysis
> on a stock, posing as a "good samaritan" helping YOU to prevent losses.
> More likely such posters want to accumulate shares by flushing out
> weak hands.
>
> Never trust a blowhard... FSLR will be just fine.
regards