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And yet another TSL update 28/5

May 29th, 2008 · No Comments

Yeah, we’re kind of sorry. Bear with us for a moment. The last few days, we have noticed a sell-off in solars (which in our view is not really warranted by fundamentals), and we also warned you that Trina was at support levels. Now, we have good and bad news.

The good news is, the support held, and how. From 44.5 we went straight to 49. Now you understand why we have to write so much about this stock. We also, albeit timidly, argued to buy a little, bot yesterday in the low 45 and today even a bit lower early in the trading day. That might have played out nicely.

However, there is also bad news. We surmised that the sell-off in solars was connected to falling oil prices. And guess what? Once is a correlation, twice is a theory, three times..

Well, we would not go as far as to argue it is now an established fact. But it was noteworthy that during the trading day, as oil prices recovered, so did the solar sector. This means that we’re not home and dry yet. Keep an eye on those oil prices.

We have written earlier about the relation, or rather, the lack of it. In our view, there should be a relation, they’re partly substitutes. The more expensive oil becomes, the more luring solar energy becomes, so the brighter the future for solar energy will be.

We have to warn again though, that a correlation in prices, although logical, has not been there for large periods, most notably the first couple of months of this year, when oil prices kept on rising, but the solar sector was in a stomach turning vortex of selling.

On the other hand, we did say that 200 day moving average (at 44, roughly) was a support level. And that’s what these levels are supposed to do, support.

As we argued previously, we see no fundamental reasons for that support level to break, but this sector is VERY volatile, a correction in oil, or the market in general (or both), could do it, so we can’t relax yet.

Tags: TSL