An Icarian Affair for a Solar ETF and its Chart

“Solar stocks surged during the first quarter of 2015 on bullish factors including (1) broadly positive Q4 earnings news across the solar sector and positive guidance for 2015, (2) announcements by more solar companies that plan to form yieldcos, (3) indications of strong world solar demand that has solar companies running at high utilization rates and planning more capacity, (4) news that China boosted its 2015 PV installation target by 19% to 17.8 GW from the preliminary figure of 15 GW, (5) the stabilization of crude oil prices and the broader realization that crude oil prices and solar stocks have little connection, and (6) heavy short-covering,” according to a research note from MAC Global Solar Energy Index, the index provider for TAN’s underlying benchmark.

Still, the near-term technical outlook for TAN is ominous. At least that is Chojnacki’s take.

“The pullback since the high, has precipitated recently by the fall of the two companies mentioned at the top.   With a declining RSI and a MACD turning to the downside, we need to look for the next obvious support levels of the 20 and 50 week moving averages(see chart).   If Tan cannot hold those levels it may be setting up for a 20 % correction from its recent high, putting it near 40,” he said.

Guggenheim Solar ETF

Chart Courtesy: David Chojnacki , Street One Financial