Thursday, August 19, 2010

SOLR Watch

Solar power tech company GT Solar International Inc. (SOLR) has moved to bear phase on all signals with a 5.6% drop intraday. The company was downgraded two days ago, but since then it has been news free.

SOLR $7.51

Often with moves of such magnitude I'll take the stock off table. I mean, it has been there done that, and opportunities for a profit seem limited.

Not so with SOLR. The chart gives it much room to fall before it encounters serious support, and therein may lie an opportunity for a quick bear play.

I say quick because SOLR has been on the rise for several months and at its peak on Tuesday stood 74% above its June 8 low. It has since dropped off by 13%.

Person's Proprietary Signal (pps), the parabolic sar and the macd all moved to bear phase today. The more volatile fast stochastic gave a bear signal on Aug. 17, the date the price peaked.

On the Person's chart, today's decline took the price from the midline down through the first weekly lower pivot. The next lowest pivot is midway through a large post-earnings gap on Aug. 5, and the middles of gaps are often filled on correction before a trend resumes.

Person's Table
ppspps openupper pivotlower pivot
SOLR $7.51 $7.91 aug19 $8.27 +10.1% $7.23 -3.7%

The stock is still trading above the 20-day simple moving average. The significant levels are the middle of the gap --often filled, as I said -- and the bottom of the gap, which represents the most recent price support. There's also very mild support -- one day -- set on the gap day, which oddly showed huge volume but at the end of the day no intraday movement whatsoever. The close equaled the open.

Reversal Levels
  • $8.65, +15.2% (swing high)
  • $7.51 <== You are here.
  • $7.36, -2.0% (20-day moving average)
  • $7.32, -2.5% (price support)
  • $7.27, -3.2% (gap midpoint)
  • $6.94, -7.6% (pre-gap support)
Bottom line: I like this stock as a short-term bear play. Short-term means I'm doing option puts, or maybe a bear spread of some sort, all with December options. Although the strike price choices are a bit limited.

However, it is an uptrending stock that is correcting, and solar is a fairly volatile sector, so I would be right jackrabbity about exiting if I see any sort of a reverse signal.

Also, given the depth of today's decline, I might wait until Friday to see if there's a partial recovery before jumping in.
Tim Bovee, Private Trader tracks the trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment. No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.
  • psar - Parabolic Stop and Reverse
  • adx - Average Directional Index
  • pps - Person's Proprietary Signal
  • ma20 - 20-day moving average
  • macd - Moving Average Convergence-Divergence
  • sto - Fast Stochastic
About the glance: The colors indicate the state of each signal.
  • trend: Determined by the 5-day moving average, green for up, red for down, yellow for sideways
  • adx: orange for above 30-up, blue for 20-down, purple for in the middle. Red is most prone to whipsaws
  • psar, pps, macd: green for bull mode, red for bear
  • sto: green for overbought, red for oversold, yellow for the neutral zone.
  • sto zone: green for bull phase, red for bear phase.

No comments:

Post a Comment