It is always tricky trading solar stocks on technicals, because much
like the dry bulk shippers, they don't seem to trade on technicals much,
but simply on macro viewpoints and sentiment. Many times you will sell
a solar stock at a traditional resistance point and the whole sector
gets into favor and stocks rally 30% in the following 2 weeks. Or vice
versa. Perhaps this is why my style of investing falters in the solar
sector.
With that said, both Yingli Green Energy (YGE) and Trina Solar (TSL)
have been beaten with the ugly stick of late, but have enjoyed a couple
of days of rebound. In many ways these charts are identical - both
stocks fell below both the 50 and 200 day moving averages, and now have
rebounded to approach the first resistance level of the 50 day moving
average - approximately $20 for Yingli and $41 for Trina. So I am going
to cut back both here, and re-assess - obviously if crude continues to
levitate sentiment for the group will turn more positive (even though
solar is more of a direct competitor with coal or natural gas).
Simply for technical reasons, and nothing else I am cutting these stakes - Yingli Green Energy down to 0.8% of fund and Trina Solar
down to 2.4% of fund. As always, if the stocks power through these
resistance levels, we'll change course and have to pay up for the
positions we just sold off. But these appear to be dead cat bounces to
me, and the aggressive investor would in fact short these type of
charts as oversold stocks and bounce into a resistance area like this...
Disclosure: Long both names in fund; long Trina Solar in personal account
This article has 23 comments:
- bzh1111
- 14 Comments
Jun 17 02:30 AM- rana
- 66 Comments
Jun 17 04:10 AMi agree about technicals and solar sector. there are so much news for this sector that bring up the volatility and the higher the volatility the less reliable are the charts. still ona can adjust the style of trading (technical analysis, in this case) to the higher volatility, or just keep the old style as long as it's profitable (even if it's less profitable than with traditional stocks/sectors).
to me a very good trading style in this sector is to find the candidates for short squeeze, like SOLF was not long ago. when it occurs these stocks go balistic. in SOLF's case the writing was on the wall after CSIQ reported.
- fxtrader07
- 615 Comments
Jun 17 06:50 AMhello??
this doesn't make any sense.
if it were a deadcat bounce you ought to sell all before the dead cat gets its terminal drop. but then again, calling it a dead-cat bounce can only be based on a fundamental assessment of the companies and their business
apart from that, by just looking at the biger picture and the fundamentals and ignoring all the technical noise the one obvious trade still stands: short FSLR, long TSL. That's as safe a solar bet as it gets as long as you do not overleverage and are prepared to hold this position even if it gets painful inbetween. it's a hedged dot-com-like crash bet
- gebby
- 137 Comments
My Website
Jun 17 09:32 AM- stockgurl
- 1 Comment
Jun 17 09:37 AM- Jack Yetiv
- 440 Comments
Jun 17 09:59 AMI recommended TSL about maybe 5-6 weeks ago at about $41, and it's made it up to $53 and down to about $36 in that time-frame--and we are back to even money right now.
They made 29 MW of panels this past quarter, and are guiding to a mind-blowing almost 50% SEQUENTIAL increase in Q2 (43-45 MW). ASP's are holding up well, and as CSIQ confirmed today, demand is very strong. CSIQ also validated TSL's model by announcing an increase in integration which TSL doesn't have to do because it is already 100% integrated.
Although I like CSIQ a lot, whatever it does, it simply will NOT make the kind of earnings that TSL will make either this year or next--not by a long shot.
You and I know the above to be true--but it will need to be spelled out for the idiot investors out there. TSL will spell it out in its Q2 release, which I expect in 60 days. It could even happen sooner.
And you know as well as I do given the fickleness of this market that just a couple of good pieces of news and TSL could easily be in the 50's. We know the good news is there--the only question is, when will the market recognize it?
Finally, remember that cats have nine lives.
Jack
- Just a Hick
- 45 Comments
Jun 17 10:29 AMIn my book you're the greatest! Thanks to your last post, I loaded up on CSIQ and TSL call options. Having a great day today.Keep up the good work, you're analysis is very sound and thorough. How about giving an opinion on Day Star Technologies?
- gebby
- 137 Comments
My Website
Jun 17 10:44 AM- User 194768
- 12 Comments
Jun 17 11:13 AM- TraderMark
- 248 Comments
My Website
Jun 17 12:15 PMWe now have both FSLR and ENER at 50x forward earnings... and I don't mean 2008. I mean 2009.
And lowly Chinese polysilicon stocks can't get a flipping 20 forward PE ratio... specifically one.
Look at CSIQs news today - yes I realize TSL is cheap but CSIQ up 38% in 5 sessions, SOLF up 28%, and TSL 15% (after being dismembered)
I think it speaks to management and their "out of the box" decisions and lack of trust on Wall Street. Really a frustrating exercise... note Jack, I've been in TSL for nearly a year so its not like I bought it expecting a pop in 2 weeks.
- Jack Yetiv
- 440 Comments
Jun 17 01:27 PMMy point? I simply do not know when the ENER or CSIQ gravy train will decide to derail, a la STP, SPWR and FSLR. I also don't know what day a match gets lit under TSL.
What I do know is that either (1) I am wrong about TSL's fundamentals, or (2) I am right and the market will recognize it, in which case TSL will move upwards very nicely.
Frustrating? Sure. But make the gyrations work for you rather than against you. For instance, I'm happy with the double I have on the July $50 options I bought when TSL was $37.
Jack
- Global Warming Examiner
- 41 Comments
My Website
Jun 17 02:15 PMI am long term long CSIQ and TSL.
- alphameister
- 85 Comments
Jun 17 02:36 PMI share your technical approach, generally, but can't bring myself to dump TSL or YGE at current levels. When I reviewed the group yesterday to choose a stock for new money, CSIQ seemed best on a combination of technical and fundamental appeal. Sold 40% of yesterday's purchase today for a quick gain of 15%+ (knowing I'll regret the sale if I don't get a pullback). I've also been buying ESLR under 10 where it seems to have little risk in view of recent huge contract wins. I'm guessing that recent weakness in the group relates primarily to weakness of the Shanghai market generally, and I just don't see that weakness having much relevance to prospects of these companies and their stocks. Own large positions now in TSL, YGE, SOL and CSIQ with a smaller stake in CY (SPWR). Also have done very well this year in QTWW, an interesting alternative energy play with a growing role in solar.
- TraderMark
- 248 Comments
My Website
Jun 17 04:38 PMPerhaps my frustration is aggrevated by the fact after the last CC from TSL I decided I was going to find new names to bridge into, instead og being so heavy into TSL with a supportive (small) position in YGE
My 2 choices were SOLF and CSIQ
Got greedy on the first, wanted the 200 day, and instead only got 50 day, and CSIQ missed by goal by $2 or so. ($33 instead of $35)
So missed some nice moves there. Anyhow there is another train coming - I just keep missing the current ones :) Frankly a lot of frustration is the past year people who know little other than symbols buys whatever is up 25% the day before to flip to the next sucker and it usually works. Meanwhile you can sit in a "value" stock in the sector and see almost no returns. Its like watching a party from outside the window sill :)
Eventually the tide will turn. Or so I keep telling myself. I started off strong in 2006 with STP but since going into SOLF spring 2007 I've been overweighted in the wrong stock the whole time by choosing value over momentum.
Well one day TSL will pull a SOLF or CSIQ - I still believe that. Just have to ignore the fact that management is doing everything in their power to make sure that day is pushed out farther and farther. ;)
- rana
- 66 Comments
Jun 17 06:27 PMi have to assume he checked the outcomes of his trades and he has a positive return on the solar sector trading using the technical analysis as part of his system.
we are not in a competition. in each trade there will be another person that will make more money than us. we aim to make money on our trades and maximize our return based on a system (technical, fundamental, statistical....)
another good thing when posting, in order to be productive for as many of us here, will be to post stocks or trades in advance and not in retrospect. in advance is useful and retrospect is usualy harmful (at least it's what i think)
trader mark and jack are very helpful as they say what they are going to do and why. we need to add to what they are doing if we can or to ask questions or to debate it with sound resoning.
i like what they are doing as it helps me to check my reasoning and gives me good ideas to check by myself. off course the final decision on how and in what to invest is mine as only i know what is my style of trading, my risk tolerance and all kind of other factors in my decision making process.
so thanks jack and mark and all the others that post good info. let's keep it useful and productive. :)
- tessant
- 174 Comments
My Website
Jun 18 10:13 PMscott
- fxtrader07
- 615 Comments
Jun 19 06:12 AMI side with jack here - ignore the noise and hold on, use weakness to accumulate, not to cut losses. sit through rallies rather than to cut profits by exiting. and watch the fundamentals as this is an industry with lots of disruptive technologies in store that can change the entire picture almost overnight. so i would never play it with more than 3-5% of my capital
- rana
- 66 Comments
Jun 20 08:47 AMi say "every trader/investor should use the method that they are comfortable with as long as they have good positive return".
if mark is making money by using his method, it is good for him to stick with it as long as he doesn't find a better one.
people use different methods for various reasons, which in my view are mainly dependant on the psychology of each individual.
for me the method combines fundtamentals with technicals. using the fundtamentals to give the direction and the technicals to provide the timing and the strength. off course i'm talking generally here, since there are times that the magnitude of a move might be derived from fundtamentals etc...
the bottom line is that you and jack are right and so is mark, as long as what you're doing is making you money in the end of the year. if not you should find a new system or refine the one you use now.
- Learning Curve
- 33 Comments
Jun 20 11:05 AMCertainly there is the personally crafted approach and rationale. My aim is to hold a reasonable portfolio of alt.energy for the very long term and to occasionally buy and sell to balance it.
Will I make money every year? Well, last October I bought CSIQ at $9.40 but Trina at $55 (having added as the price has come down).
Perhaps after many years, I’ll have averaged ~ up 20% per year. I’m small potatoes attempting to build something my children can inherit! My 20+ positions are up 44% since the inception of this idea.
Seeking Alpha has been a big help. Thanks, guys.
- rana
- 66 Comments
Jun 20 11:44 AMwe as investors/traders must have a business plan, or as it is called "trading plan". it should start with the most general issues of who we are (financally, psyhcologically..) what we want to achieve (what return, what risk...) and how we plan to achieve it.
this should all be in our computer and should be refined periodically. when time will pass and if we will follow our plan and make it better we will become more and more successful.
if we are at the age of 30 we will have different goals than when we are at 70.
if we have 10000 the return we will demand will probably be much different than if we have 1000000 (assuming that we trade full time)
and so on
basically there are so many parameters that vary for each person and hence the reason for the different systems
for these reasons we don't have "rational" markets. all the pricing models etc can't quantify psychology of people (fear, greed etc..) and for this reason we have a market. if it was all quantifiable with absolute accuracy we were all paying smae price at a given time.
need to stop here as this subject can take forever. but if some of you haven't been following a plan, try and read about money management. this is where each investor should start and the aspect they should master the most.
- Learning Curve
- 33 Comments
Jun 20 12:10 PM- TraderMark
- 248 Comments
My Website
Jun 23 01:32 PMHumans are funny like that.
- rana
- 66 Comments
Jun 28 08:35 AMafter that being said, i want to say "good call" for mark.
but being serious there is a good lesson here. at this juncture mark had the best results as he was playing his system (technical, if i understood correctly). on the other hand there were times that the buy and hold people had better results, all in a given time frame.
we can say that there is no system that will give the best results for any given time frame. so WHAT IS THE SECRET?
we want a system that will control our losses. in other words we want to control our risk.
for those that traded long enough it's easy to understand. this is the one thing that every great trader has in common with his peers. they manage the risk well.
if mark's system is telling him that the trend has become bearish and risk is high at this point, he uses his system and gets out. he might miss big profits if he's wrong, but he'll avoid big loss, which is 10 times more important. we can live with "missing" big profits, but not with taking big losses.
for mark (and for many others) it's best to have a system that is saying buy at 30-32 sell at 40-41. get out if we go to 28. this is just an example for a system that gives you peace of mind and makes the decisions easy. even as a fundtamentalist an investor should know best entry, best exit, stop loss etc... (when i say best it means according to the system they use, it won't be actual "best").
to answer some of the possible questions regarding jack's system. risk is controled by using very low % of his total funds. even if he will lose 100% of his investment in the risky solar sector it will have relatively low impact on his overall asset portfolio.
so if you people are using all your funds for playing the sector, remember that the risk is high and it may be smarter to diversify into some pther sectors or other investments that will lower the overall risk of the entire portfolio.
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