fslr

FSLR, First Solar.

Hamilton

fslr sept 2011

Two and a half moths ago it looked like a triangle was forming. This may in fact be what has happened except that the e-wave is a bit anemic. In any case the advise was to stop out at $100 if not sold on the e-wave. Now that we are outside the triangle it looks like the original target of around $50 may be a little too optimistic. Over supply in solar panels is running at very high levels, government support programmes for things green are frustrated every where and the panels have become commodities. Much lower prices appear inevitable.

FSLR, First Solar Inc.

Hamilton

FSLR

This chart of First Solar covers only 4 years. From $20 to $320 and then losing 2/3 of that. for the past 2 years it has been consolidating, going nowhere. This looks a lot like a triangle and if it is we will know in a few months. This would favor the downside and indeed most consolidation pattern are resolved in the direction that the stock was moving in before the consolidation started, in this case down.

The fundamentals may even support the down side. As we know, all governments around the world , from Germany to Canada have introduced programs to essentially subsidies these new technologies. In most cases the price they have offered to buy electricity is a multiple of the cost and as a result the programs have been extremely successful. Every second farmer in Ontario has these big , sun facing screens in their fields (cost about $60,000). Very profitable for them if they receive a feed-in rate of 80cts/kwh, when electricity goes for 5/8cts/kwh. Rather than acknowledge the stupidity of these policies, they have simple stopped making the connections. This will dampen demand dramatically in the very near future. These subsidies are not sustainable.

If you are long this stock just keep it but out in a stop at, say , $100. At $165 this one should be shorted again using a buy stop at $180. Good luck.

CCO Cameco

Hamilton

cco mar 2011 2 cco mar 2011

Cameco is, I think , is the worlds largest producer of fuel for nuclear plants. It has had a few flooding problems of its own at the Cigar Lake mine etc.etc. but apart from that it is still the big boy in the sand box. They are like Potash Corp., they even hail from the same province and are neighbours in a manner of speaking.

The Japan tragedy has caused a knee-jerk reaction against nuclear power. Mirroring that the market is now rather fond of solar gadget producers like FSLR. Both are probable misplaced! Nuclear power contributes somewhere between 15% at the low end to 70+% at the high end (France) of the worlds needs for electricity. As it stands there is no known alternative, even if they may one day change to a less belligerent  fuel (thorium as opposed to uranium ?). Solar on the other hand has a bright future but probable not in the next 3/5 years. Our Canadian government, as so many others, has agreed to feed-in-rates that are sometimes a tenfold of the actual costs. Rather than confess their sins they prefer to stall the system by way of administrative delays, hurdles etc.etc. There are untold numbers of farmers etc. that have installed a small fortune on their roofs only to find out it may take 10 years for the connection to the grid! Most of the producers are inefficient but free markets have not prevailed and some of these companies are going to be decimated.

My guess is that CCO is a buy at about $23. By the way, UEX, UUU,and DML (Denison) all have similar chart patterns.