Satuki @ Home

The solar sector seems to have been active lately. It has been pretty weak for most of the time during this big rally. Let’s take a look at some active ones.

Trina Solar Limited (TSL)

It is a Chinese company.  The recent move was caused by the upgrade from Credit Sussie, which is based on a price reduction of about 10% in the third quarter 2010 due to the German feed-in tariff reductions, and a revenue increase for 2010 to over $1.3 billion for Trina. You can see the source here

Click on the images to have a better view

Technically speaking, I believe it will face a tremendous amount of selling pressure from the bulls trapped in the previous rally.

 
CSIQ(Canadian Solar Inc)

This company is actually based in China.  Nowadays, stocks with some Chinese background still perform slightly better than others.  The chart is basically pretty much like TSLs’.

FSLR(First Solar, Inc)

The is perhaps one of the most depressed solar stocks.  But it has been kind of firming up lately.

 
Among these 3 guys, FSLR perhaps is the weakest.  Both TSL and CSIQ have better weekly than FSLR.   All these guys are active stocks and good for short term swing trading in either directions.  Both bulls and bears can make some money from here.   Bulls might still get a few legs up from here.  Bears might short into the weakness when they run out of steam.  I believe they are actually very good short candidates.  Anyway, I am slightly biased toward shorting in general.

There are different types of stock manipulation in the stock market.  Penny stocks, small cap or even some mid cap stocks are prone to manipulation. The Chinese stocks are the worst.  Let’s take a look at TSL(Trina Solar Limited).

TSL was one of the strongest bulls during the recent run. The performance of other solar guys such as FSLR( First Solar, Inc), LDK (LDK Solar) or STP (Suntech Power) was very pathetic during the same period. There must be some reasons behind this run.  However, if you look on the Internet, you can hardly find any concrete evidence to support this run from 4 to 31( 8 t0 60 before the split).

Why was this guy so special while other solar stocks were pinned down by the overall weak solar market? It was the split.  Technically speaking, a split does not make a share holder any richer. But a stock split is normally regarded as good news for a company becuase only decent companies can afford a split.   Poor companies do reverse stock split.

So a split normally carries a very favorable market sentiment toward a company. But how the hell could an average Jane or Joe like you and I know this in 2009?  The split news hit the wire around 1/06/2010. Here it is from thestreet.com http://www.thestreet.com/story/10656574/trina-solar-to-split-stock.html .

Nevertheless, some people must have known this way ahead of the time and ran the stock up. The SEC is basically powerless in dealing with this kind of manipulation.  Do not blame the SEC though because it is extremely hard to gather concrete evidence. Let alone a Chinese company.

Click on the image to have a better view

Having said that, I personally do not mind this kind of stock manipulation (penny stock pump and dump excluded) because it adds liquidity and opportunities for us. It took quite a few months for TSL to run from 4 to 31.  If you are a trend follower, you would have plenty opportunities to make some dough in TSL.

TSL is just an example.  As for the stock itself,   the swift 30% reaction with huge volume tells us that It has lost the momentum and might face a prolonged consolidation from here.  You can see a bunch of similar stocks such as STEC and MED(Medifast), both of which are dead from a bull’s perspective.



Now, let us watch two vdeio clips from the movie Boiler Room. which talks about how people manipulate penny stocks. It is basically pump and dump. Rent it if you have not seen it. It is one of my favorite movies.

Disclosure:   No positions in any stocks mentioned in this post.