TSL support holds, setting up a breakout?
Seeking Alpha Analyst Since 2009
Trina Solar (TSL) is a Chinese ADR that I’ve bought into recently. I opened an initial position around $27.5, then added yesterday in the low $26′s, around TSL’s 200 day moving average. The fundamentals are fantastic, (P/E under 7, revenue and earnings growth 100%+, ROE over 33%, so forth), but Chinese ADR’s often have great fundamentals on paper. The risk of accounting fraud has led Chinese stocks to trade at deep discounts pretty regularly for the last decade – often with good reason. TSL has a market cap over $2B, it has decent exposure, over 60% institutional ownership, and has presumably been more vetted than some others. Most importantly to me, the chart is pretty compelling.
TSL is forming a pretty clear ascending triangle. In the last two days, TSL has tested and held its rising uptrend line – which coincided neatly with the 200 DMA. That trendline provides a nearby exit should the price breakdown. On the upside, I’d be looking for a rally to $31. A strong move above $31 would indicate a breakout.
Here’s a look a the ascending triangle that’s formed over the last 2 years:
Here’s a closer look at today’s bounce off support at the rising trendline and the 200 DMA.
It looks $31 is where to target an early exit. For the more patient and hopeful, a breakout above $31 may well be a good spot to add.
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