Solar supplies lose their luster.
The TAN solar ETF rebounded Friday and early Monday, although it is down nearly 30% from its January peak. The group has come under pressure after an increase of more than 280% in the last 12 months.
Federal subsidies have made solar panel installation cheap, and President Joe Biden’s government is prioritizing clean energy. A proposal last week to a California utility to charge new customers a monthly fee if they have sunroofs scared the group.
Danielle Shay, Chief Operating Officer at Simpler Trading, told The Washington City Times’s “Trading Nation” that the decision to invest in solar stocks comes down to timing.
“I think it all depends on your time frame. In the short term, the charts have shifted, and they are definitely in a downward pattern. With TAN in particular, I can see it drop to around $ 70.” Shay said Friday.
It traded just below $ 90 by Friday’s close and rose 3.5% in Monday’s premarket at $ 92.76. Shay’s down target implies a 22% drop from Friday’s close.
According to Shay, a long-term investment in solar energy could show a bright future.
“Over the next five to ten years, this is an area that will continue to grow. For long-term investors looking for an entry-level place, I think it’s a great place to start looking,” she said.
Craig Johnson, chief market technician at Piper Sandler, warns that these stocks may be too overloaded after recovering from the lows. The TAN ETF is up 322% since March last year.
“Only three times, in the last 30 years, have I seen the 26 week price momentum in some of our work get as high as it is now. Once we’ve seen those kinds of high levels, it’s turned around and the group usually corrects for about three years. before you find your next sustainable entry point, ”Johnson said during the same interview.
Unlike Shay, Johnson says it makes sense to sell any strength rather than buy with a setback.
“I would be selling this relief meeting right now, and I wouldn’t try to buy it yet, it’s too soon,” he said.
Disclosure: Shay is long solar shares.