We’ve been talking a lot lately about the energy markets… And for good reason.
Crude oil futures are up 60% so far this year, and natural gas futures are up a whopping 134%.
While I’m not happy about this as a consumer, it’s been great for traders like us looking to ride the wave of higher energy stock prices.
However, there is a part of the energy market we haven’t talked about in a while… Solar energy companies.
Many of these companies and their stocks saw massive runs in 2020 when the bulls were running wild.
As you can see in the chart above, the Invesco Solar ETF (TAN) rallied nearly 500% from its 2020 pandemic bottom through to its peak in early 2021.
Shares fell over the past two years as prices came back down to earth, but I’m now seeing that some solar stocks are setting up nicely for potential long trades.
In fact, I’ve already made one solar stock recommendation inside of my Alpha Stocks research service, which I’ll tell you a bit about today.
Ready to Shine
Before we get into any specific trades, let’s take another look at the TAN solar ETF using a daily chart to get an idea of the overall sector…
On the daily chart above, you can see that TAN is forming some sort of base, with price bouncing off the $56 level twice.
This could turn out to be a double bottom for TAN, but really what’s important is that the shares are attempting to break back above their 200-day moving average.
Shares haven’t broken through yet this week, but the 40% rally from the recent bottom in May leads me to believe that the bulls may have found a new sector to target.
I’ll be watching for a break of that moving average as I continue to search through the sector.
Runners Up
Now, if that level is broken to the upside, there’s a chance we could see another longer-term move develop.
And in anticipation of that, there are a few popular candidates I’ve been looking at specifically.
First is First Solar, Inc. (FSLR), which is one of the more popular solar stocks out there.
The stock jumped over 300% in 2020 before falling 50% over the past year or so. Take a look…
While it’s popular, it is currently one of the weaker choices, as it is below both of its major moving averages.
It could be making a base at the moment, but technically it’s also still making lower highs and lower lows, which is not a good sign.
The next candidate is Canadian Solar Inc. (CSIQ), which similarly saw a massive run higher in 2020 but a nearly 70% decline since the start of 2021.
You can see in the chart above that CSIQ’s decline took a pause recently at longer-term support in the $23-$26 area.
Since then, the stock has rallied as much as 64% and traded above both of its key moving averages.
However, you’ll notice that both the 50-day and 200-day moving averages are still pointing lower, which tells me that the short- and longer-term trends both remain to the downside.
My Solar Pick
Now, there is one solar stock out there that is checking all of the boxes, and that is JinkoSolar Holding Co., Ltd. (JKS).
Earlier this week, I recommended JKS for my Alpha Stocks subscribers, although it has not officially triggered an entry for the portfolio.
As you can see in the chart above, the stock is above its key moving averages, both of which are pointing higher.
However, it is encountering overhead resistance in the $64-$65 range, so we have not actually taken the position yet.
Here’s an excerpt from the alert I sent to subscribers with my specific instructions…
“JinkoSolar is the world’s largest manufacturer of solar energy panels. Not only is it big… The company produces some of the highest quality panels in the industry.
After a huge run up in price in late 2020, JKS stock has been in a base for almost two years. The stock is now trading against long-term resistance in the $64-$65 range.
JKS has shown tremendous strength over the last few weeks on a climb from $44 to $64 per share.
I would like to see the stock digest the sellers here, work through some supply, and trade sideways in a tight range for a few days or weeks. That would be the blue triangle I drew on the chart.
If it can do that, this could give us a strong move higher when it breaks out.”
Again, we have not filled our orders for this trade yet, so there’s still time to get involved if you want to.
After all, just because the traditional energy market is on fire doesn’t mean that solar should suffer.
In fact, I think it’s totally possible that the next major market move could come from the solar sector, and I certainly want to be involved.
Follow Along
Now, if you would like to get updates on this JKS trade, including when to get in and when to get out, you’ll need to become a member of my Alpha Stocks research service.
This premium service focuses on only the very best stock trading opportunities — both on the long side as stocks rise and on the short side when markets are crashing.
We recently recorded a huge winning trade on the downside in only eight days as Pegasystems Inc. (PEGA) stock plunged…
As well as a gain of over 21% in just 15 days in Permian Basin Royalty Trust (PBT) as that stock broke out of its trading range.
And we get together every Monday for an hour-long live session so that subscribers can ask questions and get guidance about our trades.
If you’re ready to see what you could be missing out on, you’re in luck!
Embrace the surge,
Ross Givens
Editor, Stock Surge Daily
