One of the standout areas during the market’s historic 2013 rise has been solar stocks, which suffered a dramatic collapse in 2011 and 2012 amid gross overcapacity, pinched margins and trouble in China — a key growth market as the Middle Kingdom shoves billions into clearing its smog choked air.
Between early 2011 and the low last November, the Guggenheim Solar ETF (TAN) lost a whopping 85%. The green energy revolution looked dead; replaced by the shale gas revolution that had more than halved natural gas prices over that time.
Then things changed. China eased away from its fight against inflation, allowing its infrastructure- and export-led economy to breathe. Natural gas prices climbed back to early 2011 levels, rising more than 130%. And solar stocks took flight, pushing the TAN up nearly 400% into a high earlier this month.
But now, as the overall stock market drifts higher on a narrowing base of support, solar stocks are the latest sector to succumb to selling pressure and roll over. On Tuesday, the TAN tested its 50-day moving average as significant negative volume hit it for the first time since February.
Here are five solar stocks in trouble, and possibly worth a look on the short side as excess optimism gets squeezed out amid frantic profit taking.