Solar Stocks Review with J Peter Lynch
Solar Stocks and Market Commentary with J Peter Lynch
Point Roberts, South Salem, New York – February 7, 2011 - Investorideas.com, a leader in cleantech stock research tools issues new commentary from contributor, J. Peter Lynch.
Solar Stocks Commentary with J Peter Lynch -
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Where is the Stock Market Going in 2011?
J Peter Lynch
Below is a summary and a table which gives you a current snap shot of the "technical picture" of each of our solar stocks. This will be updated at weekly at the end of each week and also when there are any significant changes. In addition there is a general market comment advising caution at this time.
A number of our stocks have seen their monthly momentum (longer term measure of a stocks strength) turn negative in the last week or two. The sector finally seemed be showing signs of life again after a terrible 2010, but the past week has had a number of our stocks drop below their 50 day MA – a short term negative for the stock.
At this time the strongest stocks are: JKS, LDK, SOL, SOLR, TSL and First Solar (FSLR). Two of our "solar seven" (JASO and SOLF) have had their rating reduced from Strong "S" to Neutral "N".
Market Comment - Caution Advised
At the current time the market has two potentially serious "red flags" warning investors to be cautious:
- Investor Sentiment
Investor sentiment is considered to be a contrary indicator and when too many investors or investment newsletters are Bullish – it is a time to be cautious.
At the current time BOTH the American Association of Individual Investors (AAII) poll of its members and the Investors Intelligence poll of investment newsletters are well above their danger zones of 50%.
There is no guarantee of anything in the stock market, as we all know. But levels of sentiment so extremely bullish would indicate at least the potential for a market correction of 10% to 15%
- Stocks are very Overextended
On the technical side the market is very overbought above its 200 day moving average. In fact, the current overbought condition is more extreme than any important market top in the last 10 years – certainly another strong reason to be very cautious at this juncture in the market.
Solar Stocks as of the close on Friday 4 February 2011
|Symbol||Price||50 Day MA||Trend||Mom.|
50 Day Moving Average (MA) - this is a short term measure of a stock's current technical picture. If the current price is above the 50 day MA it is a positive indication and if it is below the 50 Day MA it is a negative indication.
Overall Trend - this is the overall longer term trend of the stock (Positive + or Negative - ). When solar stocks were badly underperforming the market almost all our solar stocks were in negative trends - the stocks that turn to a positive trend first are usually the strongest stocks relative to the group as a whole.
Weekly Momentum (Mom.) and Number of weeks positive or negative - this is a measure of the short term momentum of a stock. It is derived by comparing the one week moving average (MA) of the stock to the five week moving average. When the one week MA goes ABOVE the 5 week MA the weekly momentum turns positive, when it goes BELOW the 5 week MA the weekly momentum turns negative. Momentum, on average, stays positive or negative for between 6 and 8 weeks. So a stock that has been negative for 1 or 2 weeks will usually have at least a few more weeks of negative action to come. This would be useful, for example, if someone wanted to buy a particular stock and its momentum just shifted to negative, they will likely be able to buy the stock lower if they are patient and wait for a pullback in the price of the stock.
Relative Strength - this is a measure of the strength of an individual stock relative to a widely followed index - in this case the Standard and Poor's 500 (S&P 500). If the relative strength is "buy" this means that the individual stock is stronger relative to the index and vice versa.
Rating - this a my technical rating on each of the solar stocks after reviewing the technical indicators (momentum and trend) plus a number of additional indicators (monthly momentum, strength relative to the S&P 500 stock index, overbought/oversold status etc.) to arrive at a comparative rating as to how each stock stands technically. N = neutral, W = weak and S = strong.
Keep in mind that there are two basic types of equity (stock) analysis. Below is a brief description of each and its primary purpose:
Fundamental Analysis - this is the analysis of the fundamental financial condition of the company and will identify which stocks are stocks you may want to buy as a longer term investment. This form of analysis will give you NO indication of the best time to buy the stock.
Technical Analysis - this form of analysis will tell you "when" to buy a stock. It will do this by showing you (in chart format) the basic interaction of supply and demand and when the two change and shift which will indicate a time to buy or a time to sell.
Mr. Lynch has worked, for 34 years as a Wall Street security analyst, an independent security analyst an investment banker and private investor in small emerging technology companies. He has been actively involved in following developments in the renewable energy sector since 1977 and is regarded as an expert in this field. He was the contributing editor for 17 years to the Photovoltaic Insider Report, the leading publication in PV that was directed at industrial subscribers, such as major energy companies, utilities and governments around the world. He is currently a private investor and advisor to a number of companies. He can be reached via e-mail at: SOLARJPL@aol.com. Please visit his website for the promotion of solar energy - www.sunseries.net
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Disclaimer: The views and opinions expressed in the research published are those of the individual companies and writers and not necessarily those of Investorideas.com® or any of the industry sector portals. At the time of publication, writers may hold positions in the stocks or companies mentioned.
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