This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Sell This Momentum Stock Before It's Too Late: FSLR

 DELAFIELD, Wis. (Stockpickr) -- Anyone who has traded the markets long enough knows that momentum investing cuts both ways.

Momentum is a trader's best friend when the market is soaring to the upside. Traders know that breakouts above previous resistance levels will be commonplace, and they are eager to buy strong stocks on any dip.

That being said, when the market is acting weak and the shorts are in control, momentum is also bear's best friend. What's great about momentum trading is you can count on the same stocks for high-probability setups on the way up and on the way down.

>>5 Stocks Under $10 Set to Soar

Just take a look at the recent chart for Netflix (NFLX) to see exactly what I am talking about. Momentum-based long traders took shares of NFLX all the way up from its January low of $319.70 to its March high of $458 a share. This stock was uptrending strong during that ride, with shares consistently making higher lows and higher highs, which is bullish technical price action. It was clear the bulls were in full control of NFLX, and the shorts were continually getting squeezed out of their positions.

Fast-forward to mid-March and you'll see how momentum changed on a dime for shares of NFLX. The stock topped out at its 52-week high and quickly started to roll over. The trend changed for NFLX, and the stock started to make lower highs and lower lows, which is bearish technical price action. The selling volume picked up for NFLX as it sliced below its 50-day moving average, and the downside momentum has now taken this stock to its recent low of $349.88 a share. That's a 100-point drop for shares of NFLX in less than a month. As you can see, momentum cuts both ways on popular trending stocks.

>>5 Stocks Insiders Love Right Now

One hot momentum stock that might be ready to fall into the hands of the bears and possibly get smacked down hard just like NFLX is First Solar (FSLR), which provides solar energy solutions worldwide. First Solar has a market cap of $6.8 billion and trades at a reasonable valuation of 18 times trailing price-to-earnings and 15 times forward price-to-earnings. First Solar also commands a strong balance sheet, with $1.76 billion in cash and just $225.59 million in total debt. Analysts' growth estimates for First Solar are projected at 78% for next year, which is well above the industry average rate of 18%.

1 of 3

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,265.99 +109.14 0.64%
S&P 500 2,011.36 +9.79 0.49%
NASDAQ 4,593.4250 +31.2360 0.68%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs