First Solar (FSLR) may be in a promising industry with a lot of "potential" but the charts of FSLR are still pointed down and suggest that the bears remain in control. Let's visit with the latest charts and indicators to see if there any green shoots of a turnaround on the charts.
In this daily bar chart of FSLR, below, we can see the downtrend over the past 12 months. The 50-day simple moving average line has had a negative or bearish slope for most of the past year. FSLR did rally above the 50-day average line a few times over the past year but these rallies were not long sustained. Currently FSLR is below the declining 50-day average and the declining 200-day moving average line. A rally in late February stopped short of the underside of the average line.
The daily On-Balance-Volume (OBV) line has been pointed down the past 12 months and tells us that sellers have dominated the price action. The 12-day momentum study in the bottom panel of the chart does not show a bullish divergence between the price action and the indicator, so we have not seen the decline slow and foreshadow a rally.
In this weekly chart of FSLR, below, we can see that prices have been unable to overcome resistance at around $75 but that support around $40 was broken last year and has quickly become resistance. FSLR is below the declining 40-week moving average line and the line served as resistance in February as a rally failed at the underside of the moving average line. The weekly OBV line has been in a downtrend since March 2016 and recently made a new low for the move down. The OBV line tells us that the bears are more aggressive sellers of FSLR and liquidation has been the order of the day.
In the lower panel is the weekly Moving Average Convergence Divergence (MACD) oscillator which has been in bearish territory since March 2016 and just turned down again to a fresh sell signal.
In this Point and Figure chart of FSLR, below, we can see the downtrend from a different perspective. The consolidations on the way down give us fresh downside price targets. Currently, the trade at $28 was a double-bottom breakdown and yields a potential longer-term price objective of $14.
Bottom line: The weak OBV lines on FSLR suggest that there has been a lot of liquidation of long positions and this implies further price weakness. A bullish divergence between the price action and the momentum study would be nice to suggest that the price decline was slowing but that is not the case here. FSLR is likely to move still lower toward our $14 price objective in the months ahead.
(This article originally appeared at 10:56 a.m. ET on Real Money, our premium site for active traders. Click here to get great columns like this from Jim Cramer and other writers even earlier in the trading day.)