First Solar, Inc. (NASDAQ:FSLR) shares are on the move this morning after Deutsche Bank upgraded the solar panel provider from Hold to Buy. It lifted its price target on FSLR stock from $50 to $65 causing quite the stir. The stock is poised to gap higher to $50 marking a 3.3% increase from yesterday’s close.
The timing of the upgrade is perfect. Yesterday, First Solar staged a rousing breakout signaling to chart watchers to come and partake. And now, they’ve been gifted with instant rewards. But, I suspect, more gains are in the offing for those just now looking to get in on the action.
The FSLR stock price trend staged a rousing reversal in April and it hasn’t looked back since.
Since bottoming near $25, First Solar has just about doubled in value, which isn’t too shabby for six months work. The consistent climb has turned both the 50-day and 200-day moving averages higher.
And that’s saying something.
The 200-day is a tanker of an indicator — sluggish to turn. But turn it has, and that means buyers have officially wrested back control of FSLR’s long-term trend. Over the past six weeks, the stock has formed a descending triangle pattern to work through the overbought conditions arising after such a strong run. And that has allowed the 50-day moving average to play some much-needed catch-up.
Yesterday’s pop in First Solar breached the descending trendline, suggesting the pause is complete, and the next advance has begun. This morning’s upgrade is simply icing on the cake. It’s worth noting that we saw above-average volume Thursday confirming the legitimacy of the move.
The FSLR Stock Trade
Buy the Nov $50/$55 bull call spread for $2.00. The risk is limited to the initial investment, and the potential reward is $3.00. To capture the entire profit, First Solar needs to rise to $55 by expiration.
As of this writing, Tyler Craig held no positions in any of the aforementioned securities. Want to learn how to master the art of option selling for high-probability cash flow? Check out Tyler’s recently released video series through Tackle Trading on how to systematically sell iron condors for monthly income.