During the past couple months several indexes, sectors and commodities have
sold off more than 10 - 20%. But now some are looking like new buying opportunities.
Over the next week I will bring a few of these trades to your attention as
they start to unfold.
Today we are looking at the TAN solar ETF. This sector recently had a 23%
hair cut in price. A 20-25% correction in price is a typical intermediate correction
for a fast moving sector. The price correction has pulled the sector down to
its 150 and 200 simple day moving averages. These levels tend to act as long
term support for investors, a buying point.
Many of the individual stocks within this sector are starting to pop and breakout
of bullish price patterns. These individual stock prices point to higher prices
for TAN going forward.
Be aware of crude oil.... I do think that as long as the price of crude oil
stays up solar stocks will continue to rise overall. But if oil starts to roll
over and break down, TAN will struggle.
My Technical Take on The Chart:
Big picture analysis shows a powerful uptrend with bullish consolidation.
Intermediate analysis shows a falling bullish wedge, test of moving
averages, and a reversal breakout pattern.
Short term analysis shows we are at a resistance level and we will
likely see a pause of pullback over the next few days before it goes higher.
TAN Trading Conclusion:
If price closed back below the $39.00 I would consider this bounce/rally failed.
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Disclaimer: I do not own shares of TAN as this point, but may
buy some in the near future.
