The solar sector is continuing to rebound from those very steep losses in January. We’re not surprised. Those falls were, in most cases, not warranted, although there was a need to let some air out of a few of them due to the fact that they raced ahead too far too fast.
Now, there are two forces putting wind in its sails. First is ever rising oil prices. We hit another new record this morning. As the price of other energy sources keep rising, solar energy becomes ever more competitive. The price mechanism is a wonderful thing.
We have a relative scarcity of energy and too much pollution, the price mechanism reacts to reflect those realities, and induce corrective action at the same time by providing myriad incentives to research and develop alternative, cleaner sources, to hoard energy, and to explore for more sources.
The other positive factor for the solars is that there is now talk of the coming polysilicon glut. Polysilicon is the crucial ingredient for mainstream solar panel production (there are alternative technologies that don’t need it).
This does not happen instantly, but the fact that Trina Solar (TSL), our favorite solar play, scrapped construction plans for its own polysilicon plant got people buzzing. In fact, the main reason they’ve scrapped those plans was that they saw enough capacity coming ready.
Speaking about Trina, we’re extremely happy with the run, even more so because we called it. But slowly it becomes time to take some money off the table here, it is reaching an overbought situation, and the markets are treacherous. We hope you can lighten up a little above 44.