The renewable energy names have been thrusting higher, but some names in solar have been performing shockingly well. What is more important is that they are performing much better than the anchor tenant in the space, First Solar. Looking under the hood of the industry suggests some new names to watch. While Canadian Solar has been a well-known name in the space, the others are different.
Canadian Solar has built a big base but is breaking out. The relative strength broke out to new two-year highs. This stock is moving higher faster than the $SPX. By outperforming the $SPX, this will help attract more interest. The price is breaking out to multi year highs which means fewer investors are interested in selling. One small weakness on the chart is that the volume is quiet. We would like to see institutional investors stepping in to buy large volumes.
Another solar related stock is DQ. DQ is a Chinese solar manufacturer. The stock has recently moved above the $27.50 level where there has been significant resistance in the past. The spurious move of the last two weeks is difficult to jump on, but the 2017 breakout was similar. The volume acceleration suggests new interest and the momentum shown by the PPO is definitely improving.
The next one that is starting to break out is SolarEdge Technologies. This stock is starting to improve in Relative Strength shown in purple. The full stochastic is moving up above 50 which is a bull market trait. I do like to see the price breaking the recent downtrend and start to move back above the base. While the volume has been down trending, any break of the volume profile would be helpful. The PPO shows the momentum turning up on the stock.
The renewable industry has been improving and the last two weeks shows this group of stocks accelerating. These charts look well set up. While the overall market has been running significantly, any pullback would be problematic as the indexes are nearing or crossing their 200-day moving average. I am encouraged to get on these stocks as they break out, but it is important to keep technical stops in place in case of overall market weakness.