If we were in a bull market, I'd let these solar names run farther since they can rally for a few good weeks in fantastic fashion but it's been about a week and a half and this market is infamous for stealing gains away from you in the dead of the night. In my "layer in and out" approach I am going to begin taking profits in my "big 3": ReneSola (SOL), LDK Solar (LDK), and Energy Conversion Devices (ENER) - the latter I am beginning to worry about because I am hearing it's name almost on every website and financial TV show I watch in the past 48 hours.
Energy Conversion Devices and Solarfun Power (SOLF) report next week and that pretty much ends the major names in the sector. If this rally continues into those reports I plan to cut back much more severely as in my mind, it would set up a sell the news reaction. We've had a great run in a very short amount of time and I'll let other people assume the risk from there. Especially in this sort of market. However there is no "technical" reason to sell - the charts of these 3 are excellent
- ReneSola (SOL) - reducing from 3.7% to 2.7% stake with sales in $19.40s
- LDK Solar (LDK) - reducing from 2.5% to 1.9% stake with sales in $47.40s
- Energy Conversion Devices (ENER) - reducing from 2.2% to 1.4% stake in $78.30s
To offset this I am going to add to position in Trina Solar (TSL) on what appears to finally be a breakout over the 50 day moving average - again the cheapest name in the sector by a country mile. But if it reverses back below that level we'll cut it back sharply. I am upping this from 0.6% to 2.4% exposure.
Despite fantastic fundamentals and very cheap valuations in the Chinese names, these are sentiment plays and sentiment can turn on a dime in this market. And when these stocks reverse and go down it is vicious. So we won't be pigs and we'll enjoy locking in some great short term gains.
Long all name mentioned except Solarfun Power in fund and personal account
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