With just four more trading days left in this first quarter of 2016, many stocks — and even whole indices — are at key areas of technical resistance. If these areas can be overcome, more upside may lie ahead … but a failure here could get the next leg lower in motion.
Enter: First Solar, Inc. (NASDAQ:FSLR).
First Solar stock is fairly flat for the year. And while FSLR is a volatile stock, it has not exhibited any unusual volatility this year — which is very unlike the broader stock market.
First Solar’s relative resiliency is telling, and if this continues, this could lead into a notable push higher that you could sink your teeth into.
When FSLR reported its latest quarterly earnings on Feb. 23, the company beat on both the top and bottom lines while reaffirming its fiscal 2016 earnings outlook of a range between $4 and $4.50 per share. The following day, First Solar stock rallied to the tune of more than 10%, but it wasn’t enough to lead to a more meaningful longer-term breakout.
First Solar Stock Charts
Speaking of the multiyear time frame, on the first chart, note that after a steep ascent from 2012 into 2014, FSLR slipped into a major consolidation phase that continues to this day.
With double bottoms in January 2015 and again in September, the stock firmed up a solid lower end of this consolidation phase. The push higher off the 2015 double bottom has been almost uncharacteristically orderly, and has in the meantime lifted First Solar stock back to its 2014 highs. The big picture of horizontal resistance is right around the $75 mark and has yet to be seriously challenged.
Until this area holds as resistance, a better blast-off higher will likely need to wait. But if and when this takes place, active investors had better be ready to participate.
Zooming in on the daily chart, we see that First Solar stock has show much respect for its 50- and 100-day simple moving averages (yellow and blue lines, respectively) since last October. While the 50-day MA failed to hold as support on a daily closing basis, the 100-day did hold in early February. Last Thursday, FSLR stock once again tested its 50-day moving average and it has held as support.
As a result, active investors have two focus points now:
- Any bullish reversals confirmed with follow-through buying either off the 50- or 100-day moving averages should be bought for moves back toward $75 as a first price target.
- Any break below the 100-day MA should be heeded as a stop-loss sign.
Like what you see? Sign up for our daily Beat the Bell e-letter and get Serge’s investment advice delivered to your inbox every morning! Download Serge’s Free Special Report: 6 Keys for Successful Trading and Investing.
