In the midst of a broad equity market sell-off following the latest inflation data, one sector stood out by surging higher: solar stocks. This jump came in response to the presidential debate, fueled by renewed optimism for renewable energy in the event of a Vice President Kamala Harris victory in November. While the overall technical outlook for solar has been lackluster in 2024, with the Invesco Solar ETF (TAN) down over 25% year-to-date, there are pockets of strength worth exploring.
First Solar Inc. (FSLR) has had an interesting journey this year, with an impressive run that peaked just above $300 in mid-June before experiencing a significant drop. The stock found new support around $210 and settled into a trading range between $200 and $240. This range aligns with previous resistance levels from 2023, emphasizing their significance. When a stock is consolidating within clear support and resistance levels, waiting for a confirmed breakout is often the wise choice. For FSLR, a move above $240 would signal a potential retest of the $300 high from 2024.
Sunrun Inc. (RUN) presents a more attractive technical setup, already in a confirmed uptrend. After establishing support around $9 in late 2023 and retesting it in early 2024, the stock has been forming higher highs and higher lows. Pullbacks to the 50-day moving average during an uptrend can serve as excellent entry points for investors looking to ride the next leg higher. RUN recently pulled back to its ascending 50-day moving average, indicating a possible continuation of the uptrend. However, there are overhead resistance levels to keep in mind, particularly in the $20-24 range. Breaking above $24 could pave the way for further upside potential.
During periods of market turbulence, identifying stocks and sectors that defy the broader trend can offer valuable insights. While solar stocks still face challenges, their technical setups suggest the need for close monitoring leading up to the November elections. The potential impact of a Harris victory on renewable energy policies has fueled optimism in the sector, highlighting the importance of staying attuned to changing market dynamics.
The recent surge in solar stocks amidst market uncertainty underscores the resilience and potential of the renewable energy sector. While individual stocks like FSLR and RUN exhibit distinct technical patterns, both offer opportunities for investors to capitalize on their respective strengths. As the landscape continues to shift and evolve, staying informed and adaptable is crucial for navigating the complexities of the market. As we approach a pivotal moment in the political landscape, the future of solar stocks remains an area worth watching closely.