The sun hasn’t been shining in the land of solar stocks recently. And it’s a darn shame since the solar space was on fire during the first four months of the year.
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Amid the ongoing sunshine strike the Guggenheim Solar ETF (TAN) has shed almost 20% of its value. That’s bear market territory, folks.
The steady downtrend has been littered with high-volume down days suggesting this isn’t just a garden variety bout of profit taking. What we have here is a genuine distribution deluge.
No doubt it will end at some point, but for now the bears have sunk their teeth into solar stocks and don’t seem in a hurry to depart.
As the deterioration in TAN has continued, both the 20-day and 50-day moving averages have rolled over in true bearish fashion.
If you’re on the lookout for bearish trade ideas consider these three ailing solar stocks:
3 Solar Stocks Going Dark: Solar City (SCTY)
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The biggest component of the TAN ETF in our list is Solar City (SCTY). The stock notched its sixth consecutive down day on Tuesday amid relentless selling pressure.
With the stock having descended back below its 200-day moving average its April breakout has now officially failed.
Failed breakouts are a particularly vicious sort as they add a ton of overhead supply into a stock. Any and all participants who plowed into SCTY stock following the resistance breach are now sitting in losing positions and apt to sell on any future bounce in price.
This should continue to weigh on SCTY in the near-term.
Buy the Oct $57.50 puts to profit from continued weakness.
3 Solar Stocks Going Dark: First Solar (FSLR)
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First Solar (FSLR) has perhaps the cleanest setup among the bunch. As one of the first big-name solar stocks to tumble back below its 200-day moving average, it’s been an anchor weighing down the rest of its sector.
Since falling to the $50 zone two weeks ago it’s spent its days consolidating in sideways fashion digesting its recent downswing. The near-term support level of $49 provides a clean entry for new bearish trades.
Should FSLR stock breach support, buy the Aug $50 puts to capitalize on its next descent.
3 Solar Stocks Going Dark: Sun Power (SPWR)
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Rounding out the list is SunPower (SPWR), which has followed a decidedly more choppy path than its brethren.
Even with a 5% pop today, SPWR has been in a holding pattern since its late-February earnings gap, unwilling to venture too far away from the $32 zone. Its meanderings have taken on a downward bias, leading to declining 20-, 50- and even 200-day moving averages.
Like FSLR, SPWR stock has a short-term support level that can be used as an entry point for new bearish trades should it break.
On a break of $29.80, consider buying the Sep $31 puts to exploit further weakness.
At the time of this writing Tyler Craig had no positions in any of the aforementioned securities.
