Solar Stocks Review - Monday 2-14-2011

An overall summary and table are below which gives a current snap shot of the “technical picture” of each of our solar stocks. This is updated weekly and also whenever there are any significant changes.

Summary

Note: At this time there is a general market comment advising caution at this time.

A number of our stocks have seen their monthly momentum turn negative in the last week or two. The sector finally seemed to be showing signs of life again after a terrible 2010, but in the past few weeks a number of our stocks dropped 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".

Critical levels for the weakest of our "solar seven"

JASO - starting to show some strength. If stock closes below $7.00 it is a further sign of weakness, if the stock closes above $8.25 it is a sign that the stock has regained its upside strength.

SOLF - SOLF is at a critical long term support level. A close below $8.00 it would trigger a sell signal.

Other Stock Comments

SPWRA - starting to show some real strength for the first time in quite a while. Looks like the next candidate to move up to a "S" strong rating.

Market Comment - Caution Advised

Currently 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 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 historically 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 significant reason to be very cautious at this juncture in the market.

Solar Stock Review as of the close on Friday 22 February 2011

Symbol	Recent Price	50 Day MA	Trend	Weekly Momentum	# of Weeks	RS Sig	Rating
ASTI	3.31	3.468	-	Neg	1	Buy	W
CSIQ	14.37	13.588	-	Pos	5	Sell	W
CSUN	4.45	4.442	-	Neg	0	Sell	N
DSTI	1.37	1.6	-	Neg	1	Sell	W
EMKR	2.3	1.449	-	Pos	3	Buy	S
ENER	4.09	4.582	-	Neg	5	Sell	W
ESLR	2.2	3.231	-	Neg	13	Sell	W
FSLR	166.11	141.726	+	Pos	8	Buy	S
JASO	7.73	7.191	+	Pos	5	Buy	N
JKS	28.58	24.628	+	Pos	5	Buy	S
LDK	12.92	11.576	+	Pos	5	Buy	S
RSOL	2.73	2.64	-	Pos	7	Sell	W
SOL	11.38	9.73	+	Pos	6	Buy	S
SOLF	8.79	8.68	+	Pos	8	Buy	N
SOLR	11.2	9.939	+	Neg	1	Buy	S
SPIR	5.74	5.175	+	Pos	1	Sell	W
SPWRA	16.04	13.846	-	Pos	8	Sell	N
STP	8.91	8.596	-	Pos	9	Sell	N
TSL	27.37	25.248	+	Pos	7	Buy	S
WEST	0.53	0.51	-	Neg	0	Sell	N
WFR	13.73	11.793	+	Pos	5	Sell	N
YGE	12.14	10.843	-	Pos	6	Sell	W

Table Keys:

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.

Background Notes

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 when the timing is right. 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.