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With solar stocks catching some action today, I wanted to update my analysis on the weekly chart of TAN, ETF for the solars. As you can see below, the case for an inverse head and shoulders bottom on this weekly timeframe was damaged with the recent period of selling. However, the volume pattern has taken a turn for the bullish in 2012, with strong buyers layering into the solars the first six weeks of the year, followed by declining selling volumes over the past five weeks or so.
While the volume pattern is very promising for bulls, at the end of the day price is the most important indicator there is. The bulls need to make a higher low here, above the $24/$25 level, rather than relying on the the solar fairy for a magical bottom. If we have seen the last bit of selling here, then $38.70 becomes the major breakout target for bulls to really get the ball rolling.
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