Solar stocks have been some of the best stocks to own this summer, with names like First Solar (FSLR) and Enphase Energy (ENPH) leading the highest charge.
These stocks rallied more than 140% from their May low to their recent high and helped fuel the Invesco Solar ETF. (SO) higher. These two stocks are the ETF’s largest holdings, with a combined weighting of more than 22%.
While the overall market is under pressure on Wednesday, solar stocks are getting hit hard.
Enphase Energy is down about 13% on the day, while First Solar shares are down about 6%.
We’ve traded these stocks exceptionally well so far this year, so let’s take an updated look at the charts.
Enphase Energy Stock Trading
Enphase Energy Stock Daily Chart.
Chart courtesy of TrendSpider.com
Enphase Energy’s stock was already trading pretty well in early July, but then earnings sent the name soaring. It widened the gap on July 17, gaining more than 17% on the day. It widened again on July 18, gaining more than 7% on the day.
Since then, it had been treading on the $275 level as the stock consolidated its recent gains.
With Wednesday’s decline, Enphase Energy shares have fallen to the $275 level and hit the second of two major gaps, this one at $257.55.
Now trying to find their starting point around $250, the bulls will want to see a move back above $257.55. If it can do that, then the 10-day moving average and the $270-$275 area could be back in play with a bounce.
Otherwise, less than $250 could result in a test of the $220 area. In this area we find the 50% pullback from the recent high to the 2022 low, as well as the second level of gap filling. Finally, the weekly VWAP measure also comes into play in this area.
Negotiation of first solar shares
First Solar stock daily chart.
Chart courtesy of TrendSpider.com
The first solar stock is a little more straightforward. The stock has support near the $130 level, but I’m looking for a slightly bigger decline for a better risk/reward setup.
This comes after stocks broke out to new highs for the year on Tuesday, but are reversing the decline on Wednesday.
Specifically, I’m looking for a dip into the $120-$125 area. There we find a lot of levels that could help give this stock a boost. They include the 50-day and 10-week moving averages, the daily VWAP measure and the breakout level from the 2021 high.
