Teach Talk Trade Day Trading & Technical Analysis

Energy Stock Directions 12-05-07 (Wednesday): A Technical Analytical View of Solar and Alternative Energy Stocks.

STP (Suntech Power Holding Company Ltd.):  T8 supports market all the way up!

In a report that we published in April, STP was one of the tweny solar and alternative energy stocks that we recommending trading.    At the time, STP was trading in the thirties.  Many times when a stock more than doubles, there is a tendency to shy away from participating in the move.  Many traders feel that the potential has been reached when a stock doubles or triples its price.  Don’t allow these thoughts to curtail buying in some of the strongest stocks trading.  Many of the stocks that fall under this sector have put up spectacular numbers this year.  Take the ride, enjoy the view.

The Chande Momentum Oscillator, our preferred momentum oscillator for STP , has turned up before hitting its lower trigger level, and that’s a very positive sign.    

The direction of the T8, our exponential moving average and trend definer, has been positive since the middle of October.  We would like to see the market to drift down to the T8, at that point, but first we expect the market to rally. Retracements to a positive T8 are almost always buying opportunities.  Please note that there has been nine retracements or openings below the T8.  All of these entry opportunities have turned out well.

Tuesday’s candle was a “bearish engulfing “. “Bearish Engulfing” candles are signs of market exhausting itself on the upside. Look for movement to  continue down to the T8.  We would like to buy the retracement of this bull flag that the market is painting.

***Volatility Alert:

During the third week in July, volatility returned to the major stock indices. For approximately four years, the markets have had low to very low volatility. This significant change has ushered in swings of 100, 200 & 300+ points, sometimes on a day-to-day basis. Stock indices tend to be either volatile, or not, for three to five years at a time. Expect continued volatility. This volatility cycle is in its early stages and we continue to believe it is here to stay.

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