Many traders are wondering if LDK Solar will break the mold for the quarter and start a group based rally. Several of the major solar names have posted good earnings that beat expectations, but the stocks failed to follow through with any rallies. These names need volume again.
LDK Weekly Chart
Today in the after hours trading LDK broke out from a massive wedge pattern. The initial surge tested $44 and closed near $40. Typically, longer time frame patterns behave more consistently. What makes this so compelling is how clean the trend line is with multiple instances of confirmation on solid volume. If LDK can close this week above the 8 month trend it should be very bullish for solar stocks. The fundamentals are there, but institutional money seems to be in a wait-and-see mode. Based on research and observations from SEMICON West the demand for solar anything is massive, but in many people’s minds so is the risk in this group.
LDK Daily Chart [AH activity not displayed]
From a basic technical perspective LDK needs to close above $38.50 and have volume based follow through. If it’s strong it should easily test the last swing high at $48. The swing high at $48 also coincides with a 50% Fibonacci retrace from IPO to the double top. This might be trivia, but two coincident levels from two different technical methodologies should be of note.
LDK has the cleanest pattern formation of all the solar names with many reference points on the trend line. Today’s AH volume wasn’t massive, but it was strong. Average daily volume has slipped recently from 3M to 1.5M. The last swing high was printed on a 10M vol. day. Heavy volume on Tuesday will be encouraging for confirmation of a pattern breakout.
YGE Daily Chart
Included are FSLR and YGE as reference of how they failed somewhat similar wedge patterns. Note the declining average volume in both names. The dashed purple line is on-balance volume. The failures were very close to their 50 day simple moving averages, which makes for neat and clean technical trading.
FSLR Daily Chart
All trades, patterns, charts, systems, etc. discussed and the product materials are for illustrative purposes only and not to be construed as specific advisory recommendations. All ideas and material presented are entirely those of the author and do not necessarily reflect those of the publisher or gamingthemarket.com.
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