Trading the Solars: Several Interesting Plays

07/20/2010 12:01 am EST


Last week on, I discussed timing themes and the benefit of seeing repetition in the markets, but that’s just one way the astute trader can locate profits.  Another is to notice sectors and groups that are seeing rotation.

Currently, solar stocks are making quiet but steady headway, exhibiting some very nice relative strength. While the market is bouncing from its most recent correction low, several solar-related stocks are already in uptrends, boasting higher lows and higher highs.

Even better, there are a few of them that are looking poised for higher prices, provided of course that the patterns they’ve built are indeed confirmed.

I wanted to bring a few to you today and put them on your radar. Here’s a quick rundown of some setups I’m seeing:

SOL is pulling back in a shallow fashion here after a nice run, creating a bull pennant pattern. An upside resolution to this pattern could send this stock heading toward the spring highs.

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STP just confirmed a higher low with the creation of a higher high, and has been resting for a week.  A return of strength would give this one plenty of room to run higher, but the consolidation area needs to be cleared first. Until then, it’s simply resting.

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NEXT: Four More Solar Plays to Watch


SOLF has been acting well, rising on strong volume in the past couple of weeks and basing here on quiet volume. An upside resolution to this bullish consolidation would technically be very positive.

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JASO jumped big from the July 1 low, confirming a short-term higher low and higher high. It’s been consolidating and looks ready to challenge resistance.

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TSL is already on the move out of its consolidation after creating a higher low in recent weeks, but still has room to run.

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Even TAN, the solar ETF, is looking good, so long as this bullish pattern gets confirmed with a move higher out of the consolidation. A higher low and a higher high have both been established.

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By Jeff White of The Stock Bandit
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