First Solar, Inc. (FSLR) — Shares of this solar modules manufacturer are currently trading in a tight range following the post-earnings rally on Aug. 5. With gaps to fill on either side, this now sets up an interesting opportunity for active investors and traders.
When First Solar reported earnings on Aug. 4, it beat expectations on both the top and bottom line. Specifically, the company came in with earnings per share of $0.93 versus estimates for $0.49. Revenue rose 65% year over year to $896 million, beating analysts’ forecast of $789 million. Full-year guidance also came in ahead of expectations. FSLR stock rallied 17% the next day on impressive volume.
Looking at FSLR stock through a multiyear lens, we see that the early August rally once again pushed the stock off its multiyear support line and back toward the middle of a narrowing 2015 trading range. Ultimately, this range will have to resolve in one direction or another. For now, the Aug. 5 breakaway rally puts the odds in favor of an eventual break higher.
On the daily chart, note that the post-earnings rally pushed FSLR stock marginally above its 200-day moving average (red line) and right into the 100-day moving average (blue line), which has served as a good toggle point for a couple of years now. Since the rally, FSLR stock has traded in a narrow range as it consolidated the move. Ultimately, this tight range will also resolve and this offers traders a two-way opportunity.
A break below $50 could begin to fill part of the Aug. 5 up gap. Alternatively, a daily close above $54 would likely quickly fill the down gap from May 26 and could put FSLR stock back above its 100-day moving average, which would target a run to the $60 area through at least a multiweek lens.
