Speculating on Chinese Solar: Throw a Dart and Smile

Time to start getting wary again as daytraders start to pounce on low end meat products such as solar. If this continues, we might see dry bulk shippers up 50% tomorrow across the board. Or maybe it will be Chinese small caps circa October 2007 when they doubled every 3 days. Chinese solar stocks simply have to be the best sector ever; if you buy and hold, you lose money 340 days a year,but the other 25 you can triple your money in periods of 3-4 day increments.

I don't have any value add here - the solar true believers can give you the scoop of why companies being obliterated on business metrics are "deep values" here. There are general reports that China might subsidize solar, and as a rally gets longer in the tooth daytraders move down to more speculative areas... simple as that. I've been in this sector since late 2006, and that's just how they trade. Throw a dart and smile.

Two ways you can look at this - bulls can say the rally is widening out in a very broad way and speculative juices are back, bears can say when speculative merchandise starts to run like this we are getting very long in the tooth and approaching the last few innings of the rally. I am ambivalent, but for your viewing pleasure....

(I believe David Einhorn of Greenlight Capital [hedge fund] owns JA Solar (JASO) so congrats)

Comments

[Conan the B...:]

You have some great looking charts above.

The only one not fitting the mold appears to be LDK with a distinctly Lower low.

Regardless of where they go, expect them to go back down to their respective breakouts or the early Jan. highs if they manage to go above them.
IMO

Do you have anything in the Carbon Emmisions Sector, future article maybe?

Mar 27 12:00 PM

[gebby:]

you sound negative yet the charts look very good on balance and smart people are obviously buying. i dont see anything speculative about the chinese announcement. more speculative to bet against a large mega trend towards clean energy

Mar 27 01:43 PM

[Conan the B...:]

Mega?Trend...

Wow, These are all very short term patterns.

Take a look back a few years and these charts would show a squiggly Dead Cat bounce.

Oil is in the same MegaTrend then since their Charts a very similar to the Downside and Peaked around the same time(months).

The bounces here can be a hundred percent or more which attracts my interest. Look to PZD for a comprehensive shotgun approach. IMO

Mar 27 03:43 PM

[PeteK:]

If you got BURNT twice and want one more,
go ahead, make your day.

Mar 27 11:40 PM

[Conan the B...:]

PeteK: This is next year's trade and it all depends on what gets through on the Stim Pack.

If I was going to buy any individual Solar, I would go with ESLR, because they manufacture here.

Mar 28 02:11 AM

[gebby:]

paultaut, mega trend in solar build out, not stock trend. you dont believe in alternative energy?


On Mar 27 03:43 PM paultaut wrote:

> Mega?Trend...
>
> Wow, These are all very short term patterns.
>
> Take a look back a few years and these charts would show a squiggly
> Dead Cat bounce.
>
> Oil is in the same MegaTrend then since their Charts a very similar
> to the Downside and Peaked around the same time(months).
>
> The bounces here can be a hundred percent or more which attracts
> my interest. Look to PZD for a comprehensive shotgun approach. IMO
>
>

Mar 28 09:59 AM

[Alphameister:]

Every bull market begins with a "dead-cat bounce." With most of these stocks down on the order of 90%, it's not as if looming margin pressures haven't been discounted to a considerable extent. For China to make a major commitment to clean energy generally and solar especially would seem to make a lot of sense as a source of economic stimulus that also tends to placate worldwide opinion that China needs to clean up its polluted air. I've trimmed my holdings of solar stocks on this short-term explosion, but I'll be looking to build those positions on a pullack.

Mar 28 10:44 AM

[enigmadude:]

I agree with alphameister - I just sold my shares of YGE for a small profit, but will look to add more when the pullback brings the price back down to another trough - probably in the $3-4 range, looking at the chart provided. Not a buy and hold sort of stock - in this market.

Mar 28 11:47 AM

[aquaculture:]

At least you got the idea how strategically important -and manipulated-this small sector is. It has a supply/demand elasticity the size of the strait of Hormuz -relatively speaking.

The charts no longer surprise us.

Mar 28 07:43 PM

[PeteK:]

Conan,
I had kept ESLR for a long long time until it dropped to A BUCK.
Then I said "The Hell with it !!"
Oil is my play now.
Oil is not controlled by these short-AH's.
More predictable too.
Got BURNT twice by solar already.

Mar 28 09:02 PM

[aquaculture:]

I decode:
-you are not a true believer in solar.
-you are not a daytrader.
-you are ambivalent at this point.

All three are not a bad stance.

I can tell you exactly where silicon solar technology will end up.
I can also predict when.
But, of course, I can't tell which companies will survive on the way to get there, because I don't know. (use a monkey machine)

A lot depends on your level of knowledge and interests.

Chinese butterfly spread its wings and fly? -chaos theory
What is value storage? -economic theory
What political system? -political theory
......................... -.....................

If you have all the technical information you need on a sector it might not be bad to (re)read some books and to think things over a bit.
Because there might actually come a point when, as a fund, you will probably HAVE to position yourself in what best suits you.
Asia, U.S, or Europe, take your pick.
As for the latter: I'd leave the darts in the box....

Mar 28 09:19 PM

[aquaculture:]

BTW, educated guess is 20-30% increase of revenue for RPC solars due to matching dollars at maybe half price for cells.

2009 world demand ~6 GW, production ~8GW (like try to stop an oil tanker)

Mar 28 10:49 PM

[omooc:]

Barron's (3/30/09, on sale 3/28/09) has an article on solar, by Bill Alpert. As usual, his outlook is negative, which may account for the sector's sell-off today (3/30/09)

Mar 30 08:51 PM