Today the spotlight shines on SunPower Corp. (SPWR NASDAQ). The company has been in the solar industry since 1985 and is headquartered in the Silicon Valley. SPWR claims it offers the most efficient solar panels available. The stock has been struggling with an established downtrend that started in 2014. The decline of fossil fuel prices has contributed greatly to the selloff. 2016 has seen a continuation of the retreat due to several additional factors.
The year started with a flood of assets hitting the market arising from the bankruptcy of Sun Edison Incorporated. In addition the extension of support programs for larger projects took the urgency out of decision making for utility scale developments. Finally competition from other companies in the business has but additional downward pressure on panel prices.
An audit of the charts will help identify how best to proceed with this stock.
The three-year chart depicts the decline that started in 2014 and the resistance along the downtrend line and the moving averages. The gap down to the 52-week low in August of 2016 came on news that the company expected to lose $175 million, and as a result would have to close a plant in the Philippines, and layoff 15% of its workforce . Analyst that follow the stock felt that they had been blindsided having been given a much more positive outlook provided by management in May.
The six-month chart pulls into focus the sharp sell off that followed the lowered guidance that came out in August. Also make note of the persistent resistance along the 50-day moving average. The RSI indicates that the stock is currently oversold. There are no patterns to suggest that we can expect a reversal of the downtrend in the near future.
Approach this wounded animal with caution.
Next time JA Solar Holdings Co. Ltd. ( JASO NASDAQ) will be in for a checkup.
Make it a profitable day and happy capitalism!