Solar actions lose their shine.
The TAN solar ETF rallied on Friday and Monday morning, although it remains down almost 30% from its January peak. The group is under pressure after rising more than 280% in the past 12 months.
Federal subsidies have made installing solar panels inexpensive, and President Joe Biden’s administration is prioritizing clean energy. A proposal last week for a California utility company to bill new customers a monthly fee if they have solar roofs frightened the group.
Danielle Shay, director of operations at Simpler Trading, told CNBC’s “Trading Nation” that the decision to invest in solar stocks depends on timing.
“I think it all depends on your timeline. In the short term the charts have changed and they’re definitely on the downside. With TAN in particular, I can see it dropping to around $ 70,” Shay said on Friday.
It was trading just below $ 90 at Friday’s close and was up 3.5% in pre-market Monday at $ 92.76. Shay’s bearish target implies a 22% drop from Friday’s close.
A long-term investment in solar could show a bright future, according to Shay.
“Over the next five to ten years, this is an area that will continue to develop. For long-term investors looking for an entry point, I think this is a good place to start. to seek, ”she said.
Craig Johnson, chief market technician at Piper Sandler, warns these stocks could be too wide after their lows rise. ETF TAN is up 322% since last March.
“Only three times, going back over the past 30 years, have I seen the 26-week price dynamics in some of our jobs become as high as they are now. Once we saw those kind of high levels, it’s canceled and the band corrected for about three years before you find your next sustainable entry point, ”Johnson said in the same interview.
Unlike Shay, Johnson says it makes sense to sell any force rather than buy on a pullback.
“I would sell this rally back up at this point, without trying to buy it right now, it’s too early,” he said.
Disclosure: Shay is long term on solar stocks.