The Solar Stocks’ Divergence

Published on Monday, 07 December 2009 13:40 Written by Christopher Lynn

New York, Dec 7 (TradersHuddle.com) – What’s going on with the solar sector today? With oil significantly below $80 solar stocks seem to be catching the bulls attention as they appear to be developing a rally that started last Friday with the breakout of First Solar Inc (NASDAQ:FSLR)

First Solar Inc (NASDAQ:FSLR)

First Solar has been very weak, since setting its peak last June above $200, it declined all the way to $118 back in August, just to rally back towards $160. This past rally failed around the 50% Fibonacci level, and First Solar saw a retest of the August lows back in November.

First Solar basically based during the month of November and now is starting to make a move breaking well above the consolidation area of $119 to $127. Now First Solar shares will face significant resistance just above $140.

If you look at the last past two days price action you have to wonder how strange the markets are, as Oil and energy has seen a significant correction, while alternative energy correlation with this is practically not existent.

LDK Solar Co (NYSE:LDK)

This very volatile Chinese company beat earnings estimates a few weeks ago, and since then has been breaking a long term downtrend line.

Today LDK is moving well above its 200 day moving average, although its currently dealing with significant resistance at $9.30 it can break out and get momentum towards the upside, if the rally in the sector is for real and comes accompanied by volume.

LDK like First Solar has been greatly underperforming the market, since reaching its peak back in June.