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How to Invest in Solar Stocks

NEW YORK (TheStreet) -- Investing in the solar-energy sector is risky because the stocks are extremely volatile, but the following analysis of eight companies should provide you with some useful guideposts.

If you already own any of these companies, you can use this information to adjust positions. If you are building positions, consider adding to longs using GTC (good until cancelled) limit orders to buy weakness to a moving average or value levels shown in the table. If you are reducing positions to book profits, consider doing so using GTC limit orders to sell strength to a moving average or risky levels shown in the table.

Canadian Solar (CSIQ)($35.13 vs. $29.82 on Dec. 31, up 17.8% year to date) provides solar modules that power bus-stop lighting, portable home systems and car battery chargers. The stock set a multiyear intraday high at $44.50 on Feb. 28, and then traded as low as $32.09 on March 14.

The weekly chart is negative with its five-week modified moving average at $36.34 in a pattern that appears as a popping parabolic bubble. This week's value level is $32.95 with a monthly risky level at $44.36.

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China Sunergy (CSUN) ($5.41 vs. $6.03 on Dec. 31, down 10.3% YTD) provides solar-cell products in China, which explains its weakness given a slowing economy in that country. The stock set a multiyear intraday high at $10.19 on Nov. 6, and then traded as low as $4.77 on Feb. 7. It's now below its 21-day and 50-day simple moving averages at $5.66 and $5.82 and above its 200-day SMA at $4.68.

The weekly chart is negative with its five-week MMA at $5.65 and the 200-week SMA at $5.46. This week's value level is $4.32 with a quarterly pivot at $5.70 and monthly risky level at $8.52.

First Solar (FSLR - Get Report) ($69.40 vs. $54.64 on Dec. 31, up 27% YTD) makes solar modules to lower the cost of solar electricity. The stock spiked higher by more than 20% on Wednesday to an intraday multiyear high at $70.99.

The weekly chart is positive with the five-week MMA at $57.29. The stock closed a penny above its 200-week SMA at $69.39, the first test of this key moving average since April 2011. My monthly value level is $56.44.

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