TSL Sell-off

If you have followed this site it cannot have come as a surprise that the US economy is not in good shape. Now, that insight seems to get a larger audience, as the Fed produced a pretty gloomy picture yesterday, and house prices had another record tumble. This has implications for the whole market. 

We just discussed our dry-bulk shipper DRYS, a faltering US economy could affect shipping rates (and there was a particular story concerning us there).

Like the dry-bulk shippers, the solars have produced nothing but good to stellar news lately. Earnings handily beat expectations at SOLF, STP, and Canadian Solar, for instance. So there is little to worry about from a fundamental point of view, if anything, quite the contrary.

However, unfortunately, this sector is also perceived as risky (we reported on that this morning), and it had a pretty good recovery after the extremely brutal first six weeks of the year (although few of these stock is close to their all-time high).

So, a breather, for now. We see that today. SolarFun is down almost 20%, but this is a favourite toy of shorters and short-squeezers. What about Trina? Here is the chart:

You’ll notice support at $45. If the market gets brutal, this might not even hold. A lesson has been provided early in the year, where Trina sold of despite absolutely stellar earnings (way above expectations). We do not really expect it, but it could happen again. You could use a stop loss at, say $43 to sleep a little better at night.

We still think it’s a temporary thing though. In fact, if you have the stomach for it, buying on the dips like we seen today could pay off. It’s not without risk though, but then again, investing never is.