A potential ray of light in solar energy

Interactive Brokers’ Traders’ Insight

By Gary Christie

The energy sector is the market's biggest laggard this year. Looking at the past 3 months, energy continues to underperform with the Energy Select Sector SPDR fund (XLE) down 7.30%. Digging deeper into the energy sector we have noticed some renewable energy stocks that are in fact outperforming their sector and the overall market.

SunPower (SPWR) is the second largest U.S solar equipment manufacturer which has seen its stock price increase almost 50% in the last 3 months.  What pushed SunPower higher last month was Donald Trump's talk of putting solar on the proposed border wall. SunPower is one of a small number of potential suppliers for the solar wall.

Our pattern recognition software has identified 17 bullish technical events on multiple timeframes for SunPower (SPWR). We will have a look at a few key events below.

Double Bottom: (Long-Term Bullish): Prices have reached a bottom after failing to break through a key support level and ultimately rising higher in a sign of reversal to a new uptrend. The Double Bottom pattern forms during a downtrend as the price reaches two distinct lows at roughly the same price level. Finally the price breaks upward above the highest high to confirm the bullish signal.

Double moving average crossover: (Intermediate-Term Bullish):  In the double crossover method (Golden Cross), a bullish event is generated when a faster moving average crosses above a slower moving average. In our example the 50-period MA crossed above the 200-period MA). In this state, the price is likely in an established uptrend.

Williams %R: (Short-Term Bullish):  The stock seems to be in a new uptrend now that the price has recovered from an oversold level (dropped below -80 then rose above). Meanwhile there is clear evidence that the trend has reversed to the upside with the indicator breaking above the -50 level. Williams %R is built on the premise that as prices increase, "close" prices tend to be closer to the upper end of the recent price range, and vice versa. The oscillator looks at the most recent "close" price as a percentage of the high-to-low price range over a specified period of time (14 bars) so when %R is high, it's likely we're seeing upward pressure, and vice versa. The line fluctuates between 0 and -100 with -20 and -80 often used to identify overbought and oversold conditions.

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