Solar Stocks Carve Out Big Bullish Patterns Ahead of Earnings

by Serge Berger | October 30, 2013 2:05 pm

Solar stocks like First Solar (FSLR[1]) and Sunpower (SPWR[2]) are always on traders’ radar. They offer something for many styles of trading.  The stocks tend to trend well over the medium- to long-term, and they offer enough near-term volatility for quicker hitters to make a buck. What’s more, they react well to technical analysis — these stocks are true trader darlings.

Sunpower and First Solar are scheduled to report earnings over the next two days — especially because the stocks have reached important technical levels on the longer-dated charts, this is a good time to take the temperature of these two stocks.

After a big rally off its summer 2012 lows, SPWR recently bumped into an important resistance area dating back to 2009, marking a large rounding bottom on its chart in the process. Through this longer-term lens, given the continued relative strength, odds favor a further push higher over time above the long-term resistance area.

spwr multi year Solar Stocks Carve Out Big Bullish Patterns Ahead of Earnings

Click to Enlarge[3]

On the daily chart, while the stock is displaying a steep slope, it continues to form consolidation areas that look attractive to buy.  Should the stock see some selling after earnings, it would need some time to consolidate before becoming a buy candidate again. If the stock rallies above $34 it could offer further momentum.

spwr daily Solar Stocks Carve Out Big Bullish Patterns Ahead of Earnings
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FSLR looks equally attractive on the longer-term chart — it too has worked hard off its summer 2012 bottom. With relative strength on its side, the stock should be able to push past its year-to-date highs and toward the long-term downtrend dating back to late 2008.  The stock is working higher with a good series of higher lows and higher highs that would only be broken should the stock break below its September 2013 lows around the $36 mark.

fslr weekly Solar Stocks Carve Out Big Bullish Patterns Ahead of Earnings
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Just like the daily chart of Sunpower, FSLR is showing a bull flag — in its case right below the year-to-date highs.  A break above the resistance line and thus out of the bull flag is bullish on all time-frames, while if the stock sells off some after earnings it must be given time to consolidate before the long side has better odds again.

fslr daily Solar Stocks Carve Out Big Bullish Patterns Ahead of Earnings
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Learn more about the strategies Serge Berger uses to create profits in the market every day. Download his trading plan in the “Essence of Swing Trading” eBook by clicking here[4]. At the time of publication, Berger had no positions in the securities mentioned.

Endnotes:
  1. FSLR: http://studio-5.financialcontent.com/investplace/quote?Symbol=FSLR
  2. (SPWR: http://studio-5.financialcontent.com/investplace/quote?Symbol=(SPWR
  3. Click to Enlarge: http://investorplace.com/wp-content/uploads/2013/10/spwr-multi-year.png
  4. clicking here: http://www2.marketfy.com/l/15492/2013-10-08/5htq5

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