Sunday, November 29, 2009
Saturday, November 28, 2009
Wednesday, November 25, 2009
Monday, November 23, 2009
The stock market looks to pullback here as we enter the holidays, I tightened up my stops today, wrote some covered calls and even picked up a few shorts. Yeah, markets generally made a new high for the year and closed with gains today but I see many reversal candles out there (gravestone dojis for example), stocks seem tired. IWM tried again to retake it's 50 dma but failed. You could even say that today there was a collective failed breakout as stocks made new highs but did not close at them. From failed moves come fast moves, tomorrow will be telling.
Sunday, November 22, 2009
I want to be bullish on solar. It seems obvious to me that in the not so distant future the cost of solar cell technology will drop enough as efficiency rises to make it the cheapest, and not to mention cleanest, source of energy. In the last energy bubble solar came close to competing without government subsidy (cost parity was effectively reached with natural gas at the peak by FSLR). I personally believe that the next leap forward for civilization (following the internet boom) will come cheap distributed energy provided by photovoltaics. Thus, I keep a close eye on the sector in the expectation that when the day comes for solar, the winning companies will see their stocks increase by orders of magnitude. Ok, enough of the anticipatory irrational exuberance, what do they look like today?
Well, not so great to be frank. Solar has underperformed the market in 2009 and as a whole is basically flat on the year. The sector is very mixed but I find that the ETF TAN is a good way to follow the industry trend. In the seven month chart above you can see that similar to JASO, the industry has been forming a wide rounding base. While TAN seems to be having difficulty getting any traction upwards, there is a series of higher lows and higher highs in place. Clearly, in order for this trend to continue TAN needs to take out $10.77 relatively soon. A break of $11.67 would be *big time* and target $18.69. I like how TAN has found support at its 200 dma for the past six months or so consistently (plus or minus a few days).
SPWRA is a stock that I bought last week in the sector but I'm not feeling so hot about right now. I picked it up after what I perceived to be an over reaction to accounting issues announced last week. The stock was down about 25% in two sessions and it seemed like a good value to me given their leadership in the single crystal silicon PV market. That being said, take a look at this beautiful bear of a long term chart:
Yikes! I think theres a good chance SPWRA is just washing out long term holders here given the volume last week and the severity of the break. But... this stock was at $165 in 2007 and aside from the global recession and a decline in energy prices nothing fundamental has gone wrong with this company (well and some recent, minor, accounting issues). I mean, many would argue that this company is the blue chip of the solar space. For the cheapest lower efficiency thin film PV its FSLR, but for the high efficiency single crystal PV its SPWRA. However, given the chart, I will have a very short patience with it. In the absence of a sharp rebound in the next week I'll be out and might even try a short. The chart is suggesting a price target in the $10 range.
Disclosure: I own JASO and SPRWA shares.
Disclosure: I own JASO and SPRWA shares.
Saturday, November 21, 2009
This week I'm going to try and post at least one chart per market day, maybe more. Lets start with this WLL chart. The obvious thing here is that there is a solid uptrend here on multiple time frames. The blue line currently at $50 connects the March low with the first correction low in July and represents the "long" term uptrend. In the intermediate term, WLL has found support at its rising 50 dma, which is clearly above it's 200 dma. So long as WLL can hold that 50 dma (currently at $59.5), which was tested Friday, I'll expect this thing to make a new high soon above $65. The measured rule target for a break of $65 is $70.
On the other hand, and this applies to many other stocks I'm seeing, especially small caps, there is a series of lower highs in place and are divergences are showing up. As seen in the chart above, CCI and RSI have been making lower highs for a few months now and to make matters worse, CCI just crossed zero as the stochastics gave a sell signal. So while the trend is up there is reason for extreme caution here. I also find it interesting that the first leg up from March lasted about five months and since the July low it has been about five months. This doesn't mean that WLL is going to correct here, but I wouldn't be surprised if it headed down to $50. Watch for a close below $59.50.
Disclosure: I have no position, but I will take one if it breaks.
Side note: This is an energy company so keep an eye on crude if you trade it.