Solar stocks seem to come and go, but some of the names in this space have caught a bid recently so it may pay to look them over to see if they may have some staying power. First Solar (FSLR) , Canadian Solar (CSIQ) , SolarEdge Technologies (SEDG) and Sun Power (SPWR) are four names we want to focus on today.
In this one-year daily bar chart of FSLR, below, we can see that prices were cut by more than half from their March peaks. Declines lasted longer and declined further than many of the bounces on the way down to a November low. The declining 50-day moving average line and the declining 200-day moving average line defined the downtrend until recently.
Prices have crisscrossed above and below the 50-day average line, and now the slope of the line is turning positive. Prices have traded in a $29 to $36 range since November and in late January, FSLR made a higher low. Prices have not broken above the January highs to meet the simple definition of an uptrend, but they are getting close.
The volume since December has been light and the On-Balance-Volume OBV line has been neutral, so we cannot say just yet that buyers have turned aggressive. The trend-following Moving Average Convergence Divergence (MACD) oscillator gave a cover-shorts buy signal, but not yet an outright go-long announcement. FSLR has more work to do to create and build a better bottom formation. Prices could rally to $40, but right now I would not feel confident of the long side.
In this daily chart of CSIQ, above, going back twelve months, we can see a downtrend from early March from around $23. Prices were cut in half but the lows were not seen until November -- at below $11. The 200-day moving average has been in a downtrend all year, but prices have rallied to the underside of this indicator. CSIQ has rallied in recent days above the 50-day moving average line, which now sports a positive slope.
The OBV line is pretty flat, and does not suggest that we have seen much accumulation. The MACD oscillator is turning up above the zero line for a buy signal. CSIQ looks like it will close above the 200-day average line, but some chart resistance in the $15 to $16 area could cap near-term gains.
In this daily chart of SEDQ, above, we have a similar setup as FSLR and CSIQ. SEDQ topped out around $28-$29 and proceeded to decline until $12 a share. The 200-day moving average line has been pointed down the entire time and the recent rally has lifted SEDQ above the now flat 50-day average line. The OBV line has inched up a little in February but that is not a strong sign of accumulation. The MACD oscillator is poised to move above the zero line -- and an outright go-long signal.
The percentage decline in the price of SPWR, chart above, has been even more severe than the earlier names. SPWR turned down from the $25 area in March and reached $6 in November. Prices have been trading slowly between $6 and $8 since the November nadir.
The 200-day average line is pointed down and the 50-day average is flat to slightly rising. The OBV line is not suggesting any sustained price strength. The MACD oscillator looks like it could move above the zero line for a buy signal.
Bottom line: After a prolonged and deep decline, the solar space is seeing some interest. These stocks can rally but without much of a base pattern, I cannot get too excited about the upside right now.