SOLF charts

Just thought I'd add my two cents on SOLF after xerxes' post tonight. First off, I don't know much about the fundamentals other than that it appears much cheaper than the solar leaders like SPWR and FSLR. Also, I have heard that there may be some issues with the company by people that have done research on it, but can't say much more than that. If you want to do some digging, I'd start with their website.


The daily chart looks pretty good, I've drawn a few trend lines on the chart above (click to enlarge). I would like to see that 50 dma catch up, but there has been a nice pullback from the highs and the RSI came in from overbought levels. One reason for concern would be that the CCI recently gave a sell signal by crossing over zero and this indicator signaled a pretty good buy back in Nov. If it can hold $25 I could see it making new highs.

On the options, they are expensive (see implied volatility above) but they have been more expensive in the past (early dec). They price in an annualized 120% move in the stock which compares to the QQQQ options which price in a 30% move. My software actually sold some puts naked earlier this week because SOLF has some of the most expensive options in the market. As far as a straddle, I like that idea because it seems unlikely to me that SOLF will stand still. It should either pop or drop, the problem is the options price that in.

As you know I am already bearish on FSLR and if it drops as big as I'm expecting SOLF won't look as cheap. Being late to the solar rally, I think SOLF carries a good deal of risk if the solar leaders like FSLR and SPWR tank. For now though, it seems like here is a low risk place to get long SOLF with a stop around $25.