Solar Stocks Continue Significant Under Performance
Solar Stocks Commentary from J. Peter Lynch
Point Roberts, South Salem, New York - May 31, 2010 (Investorideas.com renewable energy/green newswire) - Investorideas.com solar columnist J. Peter Lynch reports on activity in the solar sector.
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Solar Stocks Continue Significant Under Performance
As the old saying goes, “A rising tide raises ALL boats”, but beware because the reverse is also true. Since April 23rd, the tide has been heading out and the majority of stocks as well as our solar stocks are being swept down with the flow.
The market is in the midst of giving us our first significant correction (greater than 10%) since this bull market started in March of 2009. The underlying technical indicators I follow are still holding up, but for the first time they are signaling caution. In the next few weeks we will see if this is the 10% correction we were looking for in the natural course of a market cycle or the beginning of something worse.
As I said last earlier this month:
“The market has NOT had a correction of 10% or greater since March of 2009. Why is that significant? It is significant because there has NEVER been a bull market in the last 80 years that has NOT had at least one 10% correction BEFORE it topped out (Credit: Invest Tech Research). As a result, it is likely (from an historical statistical point of view) that we will have at least one 10% correction and then another move upward before the end of this bull market. Historically a lot of money has been left on the table after the first 10% correction, if you sold out too soon and did not give the market a chance to run its course”.
This is not to say that things cannot get significantly worse from here, but the historical odds are overwhelming stacked in favor of the market turning around and heading off to another high this year before anything truly serious occurs. But it is without question a time to be alert and to at least lighten up on weaker stocks and prepare to move quickly on the balance if conditions get worse.
If we look at the current market situation, and relate it to solar related stocks, it is a combination of a higher risk overall stock market and a solar stock sector that has been weak and is getting weaker. Given these odds this certainly is NOT a time to be buying solar stocks, unless you are a pure trader who can move in and out of stocks daily. It is not a good idea, in a declining market, to establish new positions especially in one of the weakest market sectors.
Every solar stock we follow is currently trading close to or below its 50 day moving average therefore it is possible some of the stronger solar stocks may rally from this “oversold” position. But once again, you have to be a trader to profit from this current situation.
Below is a chart of what the market and solar stocks have done since the beginning of 2010 and it is not a pretty sight. Solar stocks are down close to 10 fold greater when compared to the major indexes and are among the weakest of all the industry groups.
Solar Stocks Year to Date 2010
|Stock Symbol||Current Price||$Change YTD|| %Change YTD|
|AKNS ||0.84 ||-0.415 ||-33.2|
|ASTI ||3.25 ||-2.05 ||-38.68|
|CSIQ ||12.95 ||-15.87 ||-55.07|
|CSUN ||3.83 ||-0.79 ||-17.0996|
|DSTI ||2.2 ||-1.49 ||-40.44|
|EMKR ||1.06 ||-0.01 ||-0.9346|
|ENER ||5.56 ||-5.02 ||-47.45|
|ESLR ||0.95 ||-0.56 ||-37.0861|
|FSLR ||112.36|| -23.04 ||-17.02|
|JASO ||4.87 ||-0.83 ||-14.5614|
|LDK ||6.07 ||-0.94 ||-13.4094|
|RSOL ||3.5 ||0.27 ||8.3591|
|SOL|| 6.17 ||1.41 ||29.62|
|SOLF ||7.46 ||-0.17 ||-2.228|
|SOLR ||5.46 ||-0.1 ||-1.7986|
|SPIR ||3.51 ||-1.85 ||-34.51|
|SPWRA ||13.23 ||-10.45 ||-44.13|
|STP ||10.1 ||-6.53 ||-39.27|
|TSL ||17.5 ||-9.49 ||-35.15|
|WFR ||11.35 ||-2.27 ||-16.67|
|YGE ||9.16 ||-6.65 ||-42.06|
| || ||-24.60%|
|S&P 500 ||1089.41 ||-25.69 ||-2.3|
|Dow Jones ||10136.63 ||-291.42 ||-2.79|
|NASDAQ ||2257.04|| -12.11 ||-0.53|
Many times I get the sense that investors are afraid, that if they delay, they will miss the chance to profit from the solar industries bright future. This is NOT true. There will be plenty of time and many advances and declines in the future. Be patient, look for both the market and the solar sector to be more positive and try not to get swept up in the crowd, because the crowd is always wrong.
Never forget the two investment rules of the great Warren Buffet, one of the greatest investors of our time:
- Never lose money
- Never forget rule #1.
Mr. Lynch has worked, for 33 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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