After solar stocks soared in September, expectations are riding high for solar companies to carry their earnings momentum from the second quarter’s reports into the third quarter’s reports. First Solar (FSLR) made a big step in the right direction by announcing that it received an additional 380 Megawatt in orders from existing customers for delivery in 2011. FSLR did not provide terms for these incremental sales, but I suspect it is safe to assume the terms are favorable for FSLR given the strong demand shown by its German and French customers.
The news may have also come at an opportune time for the stock. October’s first four days of trading have already driven a 50% retracement of FSLR’s impressive 20 point gain last month. The stock is now up only 2% for the year. The last rally stopped cold right at the $150 resistance level set by 2010’s high from April. Perhaps this latest news will give FSLR enough fresh momentum to overtake this high as I still expect will eventually happen. Regardless, the stock remains in breakout territory, so dips are buyable here. I will be looking to initiate a fresh long position. (Note well that the overall market remains very over-bought with T2108 at a very lofty 86%).
(Click chart for larger view)
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*Chart created using TeleChart:
Be careful out there!
Full disclosure: no positions