TAN, FAN charts, and natgas:
Solar and wind stocks cannot sustain any uptrend, as long as natgas prices are low. TAN won't sustain any move above $11, as long as natgas can't sustain any move above $6 (now at $3.90, a totally uneconomic price). Unfortunately, many leases for natgas drilling were bought in recent years, with the lease conditional on drilling. That means, even if they lose money doing it, companies holding those leases have to drill (and produce and sell, driving the price ever downward). This situation won't change until end-2011. So, unfortunately, I don't see any sustainable uptrend, for natgas (or solar or wind stocks), till 2012. Add in overcapacity in both wind and solar, and we've got a buying opportunity, for those who believe in the long-term story.
After collapsing in 2008, TAN rebounded off its 3/09 low of $4.65. For 12 months, it was in a 8-11$ horizontal range. Then, 4 months ago, the $8 support line decisively failed. The question now is, will $8 be a new resistance line? If so, then TAN at $8 is a sell signal for solar stocks. The other possibility is, TAN will re-establish the old $8-11 range (or perhaps a wider $6-11 range). If I'm correct about natgas prices, TAN won't sustain any move over $11 till at least mid-2011. My strategy will be to sell (or short) solars when TAN is $8-11, and buy (or cover shorts) in increments when TAN is below $8. The goal is to end up, by end-2011, with holdings in FSLR, TSL, and YGE, at prices near the lows. Making ST trading profits is a secondary goal.
TAN 2Y:
FAN and TAN charts look similar. TAN is more volatile than FAN, since wind is a more mature industry than solar, and because so many of the big solars have ugly balance sheets. Just like TAN, FAN failed its support line in May (at $11), and has been unable to get above that level since. The recent new low at $9.40 confirms the year-long downtrend continues.
I'm holding FAN at prices between $14 and $9.50. I'll sell some at $11, and buy more at $10 and down.
FAN 2Y:
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