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Solar Stock Swingers: Energy Conversion

(Energy Conversion Devices story updated for Tuesday market close and trading in Chinese solar stocks)

AUBURN HILLS, Mich. ( TheStreet) -- Investors can't seem to make up their mind whether the European Union "shock and awe" bailout package is going to be a good thing for the global recovery, and the daily turns from fear to euphoria, and back again to fear, continue to toy with the fortunes of solar stocks from China to the U.S.

Several solar companies including ReneSola (SOL - Get Report) and LDK Solar (LDK) reported better-than-expected earnings on Monday, yet the double-digit rally in solar stocks was really not that outsized.

Given that the broad equity indexes were up 4% on Monday, and leading solar stocks like Trina Solar (TSL) had fallen by as much as 23% last week as euro fears worsened, a rally of 10% in solar could be judged as relatively minor, according to analysts who cover the sector, and the daily travails of the stocks will continue to be heavily swayed by the euro.

The change from Monday to Tuesday was a case in point of the power of the euro that began exerting itself as the No. 1 issue for the solar sector last week.

By Tuesday morning, with the Monday euphoria replaced by renewed market uncertainty about the European currency, the solar rally was a one-day run-and-done occurrence, and most of the solar stocks were back in the red, led by the Chinese solar stocks. The stall in the recovery of the euro, and maybe even tangential macroeconomic concerns that China's property bubble and inflation were going to force government policies that will slow growth, were taking precedence over solar stock earnings.

JA Solar (JASO - Get Report), which beat Street expectations in its earnings released early Tuesday morning, was down by 7.5% at the close on Tuesday. JA Solar not only beat the Street, but raised its guidance, and announced additional capital spending due to demand, typically all good things for a solar company to report. Yet on Tuesday, it couldn't help JA Solar avoid a losing day.

Collins Stewart raised its full year earnings estimate for JA Solar as a result of the Chinese solar cell maker's full year outlook, yet JA Solar's 7.5% decline was among the largest in the solar sector on Tuesday.

Suntech Power (STP), rallied along with all the solar stocks on Monday after it pre-reported selective earnings line-items, including revenue that would far exceed the Street consensus. At least one analyst, though, described the Suntech Power earnings pre-report as a "head fake" and said an earnings miss was still on the way.

Indeed, Suntech Power shares were among the big losers in solar on Tuesday, down more than 5%. Trina Solar was down close to 5% by the close of trading on Tuesday.
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