Solar exchange traded funds (ETFs) are up about 18% today, and some solar stocks are up close to 50%. What’s driving the sharp move upward?

Among the possible reasons:

More than 1 million shares had already been traded at midday in the Claymore/MAC Global Solar Energy Index (TAN).

Eric Savitz for Barron’s reports that the Chinese government “intends to take a firm attitude to support the local development of solar energy in China.” China didn’t offer specific details or a timeline.

Piper Jaffray’s solar analyst also commented on the sector and China’s plans, saying that it was a positive development, but impossible to quantify. Jesse Pichel said that it’s premature to bid up solar stocks on this news alone, reports Street Insider. Pichel does remain positive on the sector, though.

Both of the solar ETFs have China-based players that are up huge today, including Suntech (STP), LDK Solar (LDK) and Yingli Green Energy (YGE).

  • Claymore/MAC Global Solar Energy Index ETF (TAN): down 20.2% in the last three months; China is 26.2% of the fund

  • Market Vectors Solar Energy ETF (KWT): down 19.7% in the last three months; China is 22% of the fund

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.