Solar Stocks: One of the Hottest Opportunities
When solar stocks were left for dead in 2017, thy were left greatly oversold, ignored because of lower gas prices, concerns about phasing out government subsidies, and far too much debt.
But as it turned out, at the time, most of that fear was already priced into the stocks.
And pullbacks in related stocks were greatly overdone.
In fact, we could clearly see that with technical analysis.
Look at First Solar (FSLR) for example. In late March 2017-early April 2017, the stock just fell to $26 a share from a high of $37. As it fell, relative strength (RSI), MACD and Williams’ %R became aggressively oversold. It was a clear indication momentum was too bearish.
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As it turns out, that was the exact bottom.
Not long after, the stock would skyrocket from $26 to $68.65, proving once again that technical analysis is an essential trading tool.
We could see the sane technical setups in Canadian Solar (CSIQ) at the time, too.
Simply by watching MACD, W%R and RSI again in March 2017, we could see a clear bottom fueled by an overly aggressive bearish herd. Not long after, the stock would run from $11 to a high of $19 – a move spotted well in advance with technical pivot points.
Granted, our bullish argument wasn't fueled by technical points.
We could also begin to see industry improvements thanks to President Trump and supply-demand issues. For one, at the time, Trump wanted to install panels all over a potential 40 to 50-foot, 1,000-mile wall along the Mexican-US border.
Of course, that would be quite a catalyst for solar companies, we argued.
Better yet, Solar Energy Industries Association and GTM Research had just released their Q3 2017: Solar Market Insight report, which found that U.S. solar installation were up 8% year over year to 2,387 MW, which is enough to power 391,000 homes. At the time, they were beginning to see surprises across the country, with Texas the second largest solar-state with 378 MW. North Caroline was No. 3 with 227 MW. California mad the list with 751 MW.
Even today, solar is still viewed favorably with considerable transitions to cleaner energy. Analysts for example estimate solar installations could top 100 GW in 2018 with China making up at least half of that total.
Again, this proves that when others are excessively fearful on a sector, or a stock, dig a big deeper into why. You may just find your next big opportunity, as we did with the solar decline.
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