I’m going to make this brief…
Take a look at two charts from the top two prospects (in my own opinion)in solar right now…FSLR and WFR.
Both of these stocks are coming into a major inflection point on the graphs above. They’ve spent the last few years carving out bottoms, and are now coming into major volume pockets on their respective charts.
Notice how these stocks both spent multiple years (09, 10, 11) trading in ranges while the rest of the market flourished, then were later massacred in 2011, losing up to 90% of their values. These fast sharp sell-offs moved quickly down the price chart, leaving very thin traces of volume along the way.
Volume pockets are similar to the concept of price gaps, but are much smarter and more useful.
Prices have memory, and when prices enter a “pocket” they travel through this area of little price memory to the next price remembered. In the case of these solar stocks, we’re talking $100 in FSLR and $10 in WFR.
Carry on,
OA
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bought WLT June 20 calls @ $1.50
Yesss…you got me started on the concept of “volume voids” a few months ago.
I also have taken note (w/ a similar price target) of what I’m referring to as the “Short Seller Dick Guillotine Special” here: http://ibankcoin.com/elizamae/2013/01/03/attn-short-sellers-of-first-solar/
Great (re?)addition to iBC.
EM’s work into volume pockets is top notch.
VIZ.
Holy crap, welcome back. I got your email the other day & was tempted to get back in @trading addicts. Less time nowadays, I rarely visit here anymore.
Gonna shoot you an email about that. But welcome back, class act here folks, who backs it up w/solid plays. Man, I’m happy today.
Great to see you too, G.
Always been a fan of yours as well.
Great post. One thought to share that reinforces buying the US solar companies. So far it made sense to trade in Chinese solar stocks during momentum because they had a big advantage over US solar companies, namely selling their stuff below cost with egregious subsidies to back them. But it was recently annoucned that they will be levied tariffs and duties by EU and other governments. This levels the playing field with US companies. Ergo, FSLR and WFR have raised their appeal purely in terms of competitive pricing with Chinese solar companies like YGE, etc.
I’m new to your stuff OA, glad you’re here. Can you expand on how you’re playing WFR? I’m interested to get a sense of your approach/style.
Jun 5.5 calls picked up this morning.
I usually go short dated OTM calls. Jun options are the equivalent of a buy and hold strategy for me.
Gotcha. Appreciate you sharing your thoughts.
How far OTM do you typically reach?
I assume they are pretty close because in my experience time really starts to burn the premium if you go too far out.
Loving this blog so far. Our strategies are quite similar so I’m really enjoying this. Thanks.