FSLR (First Solar) has “gone parabolic” to quote a couple of our famous friends over at tastytrade. Since earnings were released on August 1st, the company’s shares have almost doubled in value. The trading life has taught us nothing if not that this is rare, and usually unsustainable, but the real question is, how high can it go?
The chart above shows the 20, 50, and 200-day moving averages in FSLR. The highlighted oval in July was our first look at seriously getting bullish in FSLR, with a sold August put. We didn’t place the trade, but did keep watching it, and since that point FLSR has just crushed bears. That initial moving average crossover has led to enormous results. Now the stock is getting near its 200-day moving average - in fact it’s just one or two more days away, at the pace it’s been setting lately. Whether or not this acts as a deterrent to a continued rise has yet to be seen.
In most cases we’ll wait to place a trade after a breakout until a new range has been established, or significant technical analysis gives a good indication of a stopping point. Here we’re looking for more confirmation that this bullish move could be ending, and we’ll be right on top of it when we get that confirmation.