Tuesday, December 04, 2007

I want FSLR puts


Short term argument: FSLR has had a HUGE run to say the least and after breaking out to a new high last week it has reversed on very large volume. The last time a breakout of this nature failed FSLR dropped 40% in three weeks! Oil is pulling back which should take the wind out of the solar stocks and frankly I think the broad market is going lower in the near term. It looks like the first level of support will be a 38.2% fib around $185, then the rising 50 dma around $165 which is also the 50% fib and finally big support from the prior breakout at $120. I wouldn't be surprised to see this think crater down to that $120 level given the amount of momo in this stock.

Long term argument: There isn't enough Tellurium production (a key material for their solar cells) in the world to sustain their rate of growth for more than a few years. I haven't worked out the details but they should be getting close to a brick wall in a year or two in how much Tellurium they can get at a reasonable price. The PE is currently 166 and the market cap is almost 17B. Just read this or this or this. Oh yeah, and I think the market is going lower in the long term (2-3 years minimum).

Disclosure: I have been watching FSLR like a hawk for this to happen but don't have a position, yet.

1 comment:

Chicagostock said...

This thing looks like it did a head fake and bounced off its 20day moving average. Looks bullish to take out its highs.

My opinion:
Short term= Buy
Long term= Hold
No position.

See chart:
http://i73.photobucket.com/albums/i227/chicagostock/fslr.jpg