Back on April 19th I said that FSLR was a buy at #132 and that I would ride it to around $150 a share. Ironically, FSLR stock hit $150 intra-day on April 29th. If only trading was so easy all the time. Accuracy is good, but momentum is a better tool than timing.
FSLR is now back down to $122, which isn't too much of a surprise given the overall market deterioration and the negative news. For FSLR, a company that can ride the waves of the market better than just about any stock. Now that First Solar has given back nearly $30 per share since it's recent top, it is time to start looking at this stock for another short run trade.
There are a couple key situations to watch, but the most important is market momentum. The stock market needs to turn around this week and I believe it will. However, don't try to catch a First Solar falling knife. If the Dow keeps dropping, just sit back and watch FSLR fall with it. Once the major indexes start to stabilize and show some upward movement, then look at FSLR as a short-term buy.
Back to some secondary fundamentals and technicals...
The situation with the BP Gulf Coast and offshore drilling should be beneficial to First Solar in the short-term and going out indefinitely. Solar, wind and other green energy stocks should benefit from this disaster, as the world continues to realize that fossil fuels are an archaic and foolish way to maintain a first world nation.
FSLR short sellers have had their fun. Anyone who had a short position in this stock since April 29th has done pretty well, as First Solar has been eroding from the $150 level for over a week. A certain percentage of these shorts will be buying into First Solar to lock in their gains if FSLR starts to move up a few points.
The overall picture for the company is unchanged, which is that they are on track to remain the top listed stock for solar panel production in the United States.
Also, on the contrarian front, there has been a lot of negative talk on First Solar in the last few sessions as the stock declines. This almost invariably sets up a rally. Jim Cramer will complain about a stock and check back 50 sessions later, and Blam -- the stocks up 14% from when Jim was harping and bouncing around his studio. Look for FSLR to move against the "experts" yet again.
I would say a moderate size position in FSLR if the market is rebounding. Look to try to pick this stock up below the $120 level if possible. If you make a purchase and the stock continues to drop, look at backing up your original with a buy around $105, or maybe even $95 if the market really gets smacked around. But let's wait and see how the market performs early in the week.
Whether it continues to slip or makes a turn on Monday, it's about time to buy First Solar.
