Thursday Positives: Solar Stocks See Green in a Sea of Red

by: Tate Dwinnell

No doubt Thursday’s action was ugly if you were on the long side of the market. There was a might long list of green stocks down with heavy volume yesterday, but there were bright spots provided in some solar stocks.

Despite a day when the overall market was down 4% on heavy volume, eight solar stocks finished in the green and it would have been 10 if MEMC Electronic Materials (WFR) and First Solar (NASDAQ:FSLR) could have held their late days surges.

Five in particular caught my attention by closing up with heavy volume, staging minor capitulation moves. These kinds of moves don’t necessarily mean a low has been hit, but that it is mighty close and at least stabilized. Here they are:

Trina Solar (NYSE:TSL) actually capitulated on Tuesday, hitting $15 and rallying with conviction. It did the same off the lows today. The $15 level is a clear level of support and I’m looking to buy if it gets close to that level again.

Sunpower (SPWRA) is a solar stock I had my eye on around $15, but avoided because of deterioration in the overall market as well as the price of crude. I thought I could pick it up lower, but sure didn’t think I could get in this low. Tuesday, the stock staged a very minor reversal, but couldn’t close in the green. Yesterday, it made its move and closed up nearly 4% with heavy volume. I was able to begin scaling in with a small position under $11. I still think there is a decent chance of testing $10 before it’s all said and done and if that’s the case, I will add a little more.

Next is Canadian Solar (NASDAQ:CSIQ) which has been destroyed following the guidance it gave in April indicating a big Forex hit. I don’t see as clear a support level in CSIQ as I do in TSL, so I’m being patient with this one. I want to see more high volume buying and low volume selling over the next few weeks, but today is a good start.

Suntech Power (NYSE:STP) is a solar stock that was never able to rally like some of the other China solar names this year despite being a leader that only posted one losing quarter during the down turn (Q4 2008). It too staged a minor capitulation day on Thursday, but still looks a bit shaky. I’d want to see it get back above the $10 level with good volume first and hold there for awhile before jumping in.

Finally, Yingli Green Energy (NYSE:YGE) closed in the green as well today with good volume. With a reversal off the lows on Tuesday on heavy volume and another reversal Thursday to close positive, it’s showing signs of stabilizing here, but I’d like to see it get above $10 and hold as well.

Disclosure: I began slowly scaling into both Sunpower (SPWRA) and Yingli Green Energy (YGE). I regret not getting into a Trina Solar (TSL) position around the $15 level, but will look for a spot to add a small position there as well.