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.
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) ($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.
JA Solar (JASO) ($11.80 vs. $9.17 on Dec. 31, up 28.7% YTD) makes solar cells for solar module assemblies that convert sunlight into electricity. The stock traded to an intraday multiyear high at $13.14 on Monday. The weekly chart is positive with its five-week MMA at $10.57 and its 200-week SMA at $15.46. My monthly pivot is $11.59 without a risky level.
JinkoSolar (JKS) ($33.91 vs. $29.30 on Dec. 31, up 15.7% YTD) is a China-based maker of solar cells and modules used to provide solar energy in Europe, North America and Asia. The stock traded to an intraday multiyear high at $37.98 on Jan. 8, and then traded as low as $25.45 on Feb. 5 and tried to challenge the high once again on March 6.
The weekly chart is positive with the five-week MMA at $31.84. A weekly value level is $25.93 with a monthly risky level at $41.82.
SunPower (SPWR) ($32.76 vs. $29.81 on Dec. 31, up 9.9% YTD) makes solar cells and panels that generate electricity for residential and commercial power applications. The stock set an intraday multiyear high at $37.14 on March 5. The weekly chart shifts to negative on a close on Friday below its five-week MMA at $32.56 with its 200-week SMA at $14.47. A weekly value level is $30.83 with a monthly risky level at $38.03.
Trina Solar (TSL) ($16.54 vs. $13.67 on Dec. 31, up 21% YTD) is another China-based solar company. It makes photovoltaic (PV) modules to help provide solar power for a wide range of users from residential users to the power grid. The stock set an intraday multiyear high at $18.77 on March 7. The weekly chart is positive with its five-week MMA at $15.72 and its 200-week SMA at $13.17. This week's value level is $14.64 with a monthly risky level at $21.04.
Yingli Green (YGE) ($5.36 vs. $5.05 on Dec. 31, up 6.1% YTD) is another China-based provider of PV modules. The stock set an intraday multiyear high at $8.77 on Oct. 8, and then declined to $4.17 on Dec. 9, testing and holding its 200-day SMA. The stock then rebounded to a 2014 high at $7.45 on Jan. 7, and fell to its 2014 low at $5.11 on March 18, before closing Wednesday above its 200-day SMA at $5.32. This week's value level is $5.10 with a monthly risky level at $7.87.
Crunching the Numbers with Richard Suttmeier
There are five columns with moving average titles: Five-Week Modified Moving Average, 21-Day Simple Moving Average, 50-Day Simple Moving Average, 200-Day Simple Moving Average and the 200-Week Simple Moving Average.
The column labeled 12x3x3 Weekly Slow Stochastics shows the pattern on each weekly chart with readings from Oversold, Rising, Overbought, Declining or Flat.
Interpretations: (stocks below a moving average listed in Red are below that moving average)
Five-Week Modified Moving Average (MMA) is one of two indicators that define whether or not a weekly chart profile is positive, neutral or negative. The other is the status of the 12x3x3 weekly slow stochastic.
A stock with a positive technical rating is above its five-week MMA with rising or overbought stochastics.
A stock with a negative technical rating is below its five-week MMA with declining or oversold stochastics.
A stock with a neutral technical rating has a profile that is not positive or negative.
The 200-Week Simple Moving Average (SMA) is considered a long-term technical support or resistance and as a "reversion to the mean" over a rolling three to five year horizon. (even Apple declined to its 200-week SMA in June 2013)
The 21-Day Simple Moving Average is a short-term technical support or resistance used by many hedge fund traders to adjust positions. A stock above its 21-day SMA will likely move higher over a rolling three to five day horizon and vice versa.
The 50-Day Simple Moving Average is also a technical support or resistance used by many strategists and commentators in financial TV.
The 200-Day Simple Moving Average is another technical support or resistance and I consider this level as a shorter-term "reversion to the mean" over a rolling six to 12 month horizon. (even Apple tested or crossed its 200-day SMA in nine of the last 10 years)
Value Levels, Pivots and Risky Levels are calculated based upon the last nine weekly closes (W), nine monthly closes (M), nine quarterly closes (Q), nine semiannual closes (S) and nine annual closes (A). I have one column for pivots, which is a magnet for the period shown. The columns to the left of the pivots are first and second value levels. The columns to the right of the pivots are first and second risky levels.
Investors who wish to buy a stock should use a good-until-canceled GTC limit order to buy weakness to a value level. Investors who want to sell a stock should use a GTC limit order to sell strength to a risky level.
At the time of publication the author held no positions in any of the stocks mentioned.
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff