Both of these stocks have failed to get over their previous high. There is an obvious cup-like formation on the charts. When price fails to get above, then there is usuall a pullback. Im setting my exit price for half the height of the cup and will look for a turning point then. Fords closing price on Friday was 6.69, but I shorted above that closing price. I had been averaging up my Ford short from 6.28 with a sizable portion purchased right around 7. I do own the calls to limit downside to the trade. First Solars closing price on Friday was 268. I had been shorting all the way up to the top of the cup with a sizable short right around the 280 area. I do not own calls or puts for First Solar.
The funny part is that First Solar has a market capitalization with about 1400 employees and 503 million in revenue of about 22 billion. This market cap is greater then that of Ford, GM, American Airlines, Washington Mutual, Western Union etc. Half that of Morgan Stanley.... This is a huge market capitalization and they are betting on a lot of growth almost like a tech stock from the year 2000. Honestly, how much more can this solar panel maker that employs 1400 people out of Arizona do?
Remember your formula for stock valuation stock price = (div0)(1+g)/(r-g) g = growth and so far they have been growing like crazy Until growth slows, market is gonna keep that a high multiple
My rationale is that price didnt get above the last high. Let me give you a few key examples of what happens at times when price doesnt get above the previous high. Lets take a look at INTC or Intel. Look at that cup right at the end and then price failed to get above it then wham! Now price still has a chance for First Solar and I would cover if it gets 5% of the last high then I would declare the trade to be dead. I've learned some mistakes from the past and let me bring them back for all to see.
I added some put spreads on FSLR last week and might add more as it continues to consolidate up here.
Shorting FSLR is risky. It will come back and bite. I wouldn't short FSLR and BIDU, both have a way of coming back up very fast.
I just looked at the INTC chart from the 90s and compared it up against today's FSLR chart. So many similarities. Now look at this chart where it makes me a little nervous if I were long. The entire time until recently it seemed that price respected Mr. Bollingers and Mr. Keltner's middle line. All this time price seemed to respect that line. However, in January the disrespect began. Now if the price gets above 300 on volume then I'll be a long and confident that it will move to 400. However, at this point, all we know is that FSLR can become the next year 2000 INTC with price suddenly plunging. Go back to Livermores book when he was out in Florida and this is a similiar scenario where price didnt move above the old high. He simply sold it all at the market. Its funny that the stock he was talking about in that book was right around 300 too. I dont have that book in front of me and not certain if Im 100% on the actual story in it. Remember, he was sitting by the telegraph operator when the stock when the price turned at 325. He bought a bunch then and then it turned back to 300 where he simply sold it all at the market. There was some funny guy with a cigar who was super-confident about the stock telling Jesse what a fool he was about selling it. That guy sounds like some of you in this thread. What was good logic back in the 20s was still good logic in 2000 and its still good logic today....I hear your words Jesse and going to short it. Thanks Jesse. Lets short it and if it rises to 300 then you cover and go long. Protect the short with some calls to limit downside.
Why do idiots want to short high beta strong stocks ? Isn't there some poor fundamentally screwed companies that you have a easier game? No its some sort of pride and whatever. You want to be the bullfighter in the ring and show your sword? FSLR and BIDU way too dangerous to short. They gap up on openings and rally 20-30 points in I -2 hrs.
I am short FSLR and ISRG since last week, I am up over 20 points on the ISRG short and only a few points up on FSLR, the thing is refusing to budge but I suspect it will crack with the next down wave. I wish I had more capital to short it.