State of the Chart: $FSLR

Below is a dialogue with my past post of April 5th on FSLR both to show how the charts have developed and as a journaling/accountability exercise.  The original entry was posted on twitter and StockTwits on April 5th, simultaneous with posting on this blog.  Past text is italicized and bracketed to distinguish from updated (current) text.  Past/present charts have distinct styles as well.

[April 5 – On the XLE daily chart price is range-bound, testing upper resistance in today’s session before backing off.  This range contraction could lead to an explosive move.  If the break is to the upside there is plenty of room to run.  A first target would be $78 and change, then $83-ish, followed by all-time-highs above $101. A move could be dynamic and faster than expected.]

April 29 – The ensuing breakout was to the upside and was quite dynamic (chart below).  Price swiftly moved above $74 before bull-flagging and subsequently breaking higher again.  Both RSI and MACD have room to move higher but it remains to be seen if this ascent will slow or experience a throwback.  In hindsight, the positive divergences on both RSI and MACD are obvious when price was channeling.

[April 5 – USO was flat on the day, but continues to set up for a possible breakout on the daily chart.]

April 29 – USO indeed broke out of its triangle pattern, back-tested, then gapped up into a lower volatility range between $13.60 and $14.00 (chart below).

[April 5 – With these possible breakouts on the horizon, I’m looking closely at FSLR, which should move in sympathy with USO and XLE.  The weekly chart below shows it moving towards its own key resistance level, and an upward break leaves it plenty of room to move dramatically higher.  Long term resistance is above $105.  That’s roughly 48% upside potential from current levels.  I will be watching for strength on a break above $77, and I find it more appealing to participate in solar than a direct oil play.  Weekly chart below:]

April 29 – since my post earlier this month FSLR has broken out above prior long-term resistance, flagged, and moved higher on extremely strong earnings and the announcement of a new manufacturing plant.  Price is now in an area with minimal market memory and a low volume of historical trades.  This is a condition ripe for a continued move higher, particularly if XLE and USO continue to rise.  Weekly chart below:

A closer look at the daily chart below, shows the breakout above long-term resistance several days prior to earnings, the subsequent throwback to the 20 day SMA, and then the second break after earnings.

I initiated a starter position prior to the break on April 17th and added at $75 (posted on StockTwits). My stop is a small % below the rising 50 day, as a move below that key average would signal the anticipated upward climb is failing to materialize.  Skeptics of a continued rise in energy and oil abound, and nothing is pre-ordained, but FSLR’s combination of extremely strong earnings and manufacturing growth, positive technicals, and the tailwinds of relative strength in energy is appealing.