Now that's volatility! First Solar goes from up $15 to down $7 in an hour. That doesn't say anything good about this market

07/30/2009 6:26 pm EST

Focus: STOCKS

Jim Jubak

Founder and Editor, JubakPicks.com

Granted that First Solar (FSLR) is the big momentum momma of the solar sector, but still...

The stock, already up $22 a share in a week as investors bid shares higher in anticipation of the company's July 30 earnings report, closed the day up $5.56 a share.

And then the fun started. The company blew away consensus projections, reporting 49 cents a share in earnings and about $70 million in revenue more than analysts had expected.

That sent shares soaring in the after-hours session that begins after the regular trading day is done. First Solar tacked on anothr $10 above its closing price. And then, in reaction to conference call comments about a lack of "robust" financing" for solar projects outside of Germany and the company's willingness to cut prices if that kept orders coming the stock fell. Like a rock. Shares finished the after-hours session down $6.30. That was a swing of better than $20 a share from the high in after-hours trading.

You'll notice that the news that "caused" the after-hours plunge is hardly earth shaking. Germany has long had one of the world's strongest financing for solar installatons so it shouldn't be a surprise to anyone who owns First Solar that financing elsewhere isn't as robust. And a company saying that it's willing to cut prices to keep business sure isn't the same as a company saying it had slashed prices in an effort to survive.

I think the drop in First Solar share price had everything to do with the general nervousness in this market as stocks get increasinly over-extended--and very little to do with the news from First Solar alone.

Although the major indexes went up on July 30, they're all aching for a correction and every technician on Wall Street has been telling this to everyone he or she meets for days now. This week the charts have gone from over-extended to more over-extended.

With stocks still going up, no one is quite willing to head for the door yet, but everyone is poised to move in that direction. I think that's exactly what happend with First Solar: with the stock up $30 in a week early in today's after-hours session, why hang around?

It's just another sign of the short-term, big-time volatility that investors can expect from this market in the coming days.

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