Like so many exchange traded funds holding momentum stocks, the Guggenheim Solar ETF (NYSEArca: TAN) has been unable to escape the carnage that has swept the momentum landscape.
Down another 2.6% Friday, TAN has tumbled more than 15% in the past 90 days. Making matters worse is what this week’s 5.4% drop has done to the ETF: Take it below its 200-day moving average for the first time in over a year.
“TAN, the solar ETF, is breaking its 200 day moving average today for the first time since April 2013. It has been quite a run for the sector, as TAN has gone from $15 in April 2013 to $37.50 today (and that’s down from the $51.07 high in early March),” writes Enis Taner for Risk Reversal.
TAN is being hampered by First Solar (NasdaqGS: FSLR), among other holdings. First Solar, TAN’s largest holding with a weight of 9.3%, is down 8% this week and more than 13% over the past month.
“First Solar actually broke out to a new 2.5 year high on its April earnings report, but the stock has failed to hold that breakout. That’s actually a familiar pattern for FSLR during the 2 year bull run,” according to Taner.
First Solar is not the only TAN offender. Over the past month, First Solar, Elon Musk’s SolarCity (NasdaqGS: SCTY) and Canadian Solar (NasdaqGS: CSIQ) have fallen average of more than 14%. Those tumbles overshadow the 17.6% by SunPower (NasdaqGS: SPWR). [Solar ETF Wilts on Momo Sell-Off]
SunPower is almost 5.2% of TAN’s weight, but FirstSolar, SolarCity and Canadian Solar combine for 18.6% of the ETF’s weight, according to Guggenheim data.
Investors are sticking by TAN, last year’s top-performing energy ETF. Since the start of the second quarter, the has pulled in almost $40 million in new assets and since the start of 2014, TAN is heavier by $124 million. That means almost 30% of the ETF’s current assets under management total has come into the fund just this year. [Solar ETF Nears Bear Market]
If TAN does rebound, that rebound is likely to sparked by First Solar and SolarCity, among others.
First Solar’s “chart indicates a stock under long-term accumulation, with bursts of euphoria and panic mixed in,” notes Taner.
Guggenheim Solar Energy Index ETF
