TSL is about the cheapest solar stock around, it just started a very nice move, broke out of its incredible slump, it broke even it’s 50 day moving average pretty convincingly, and then this happened. Boom, it craters 10%. A voice on the forums called it turning a trade into an investment, an expression we quite like.
That’s actually a pretty good description. It’s what happens when you buy something for a quick trade, and you forgot to place a stop-loss. Traders hell. This market has a habit of turning traders into investors. With Trina, this is not a bad thing. It should go way higher anytime soon, so perhaps some good is to come out of this after all…
The solar sector in general, and TSL in particular, has a habit of providing nasty surprises to traders and investors alike. TSL had bumper results last month, way better than market consensus. It rallied for a day, suckering in the gullible, the innocent, and, dare we say, the rational. But this is no sector for the latter.
This is a sector on steroids. There is much to say for the long-run potential, and the brutal slaughtering in the early 6-7 of 2008 has slashed valuations to reasonable levels. We would say TSL is actually downright cheap.
The sector goes through wild gyrations though, as true manic-depressed. If you do catch a wave relatively early, whichever side, it’s likely to bring considerable benefits, 30% to even 50% is possible in a couple of weeks.
That’s why on the boards, the traders often have a go at the investors. Buy and hold has not been terribly profitable in this stock. We see room for both strategies, as we think that at $35, this stock will be considerably higher in a year, but no doubt, it will go through a couple of heart-rendering gyrations once more.
If one studies it from a technical point, then one can say that the 50 day moving average lies around 33, so the short-term uptrend is still intact. It could be worthwhile picking up a few around that level, although if it doesn’t hold, well, you can always turn that trade into an investment.