Chart of the Day – $TAN -ning Salon

by Enis December 24, 2013 11:05 am • Commentary

The solar stocks have relinquished their leadership position ever since winter arrived.  However, given our long-term optimism on the sector (see our post from April), I wanted to do a quick chart check before the calendar turns on 2013.

First, the chart of TAN, the solar ETF, demonstrates the sector’s major fall from grace between 2008 and 2011:


TAN weekly, Courtesy of Bloomberg
TAN weekly, volume lower panel, Courtesy of Bloomberg

TAN more than doubled in 2013, and on significantly increased interest in the sector, seen by the large volume on the lower panel.  The solar sector has caught the eye of institutional investors for the first time in many years.

On a shorter, daily time frame, I see one major resistance area, and one major support area:


TAN daily, Courtesy of Bloomberg
TAN daily, Courtesy of Bloomberg

 The $40 resistance was slightly broken this fall, but TAN failed to hold above that area.  My hunch is that if and when TAN is able to move above that level convincingly, the sector will be off to the races.  On the downside, the $28-$30 area was prior resistance in 2013 that I expect to hold as support if the current correction deepens.  If it gets there, we’ll be looking to add some solar stocks for our investment portfolio.

Meanwhile, I’ll wrap up with a couple recent reminders of the long-term, game-changing nature of solar power.  First, Josh Brown had a good post last week illustrating the fall in solar costs over the years, with this key point via John Aziz at The Week:

If the trend of falling prices continues for another 10 years, solar-generated electricity in the U.S. will descend to a price of $120 per MW/h — competitive with coal and nuclear — by 2020, or even 2015 for the sunniest parts of America. If the trend continues for the next 20 years, solar costs will be half that of coal (with the added benefits of zero carbon emissions, zero mining costs, and zero scarcity).

And that’s just in the U.S.  Other parts of the world are also huge beneficiaries of that changing cost comparison, particularly where the sun shines brightly.

Second, Solar City announced last month that it has partnered with Tesla to offer some of its customers Tesla’s battery-pack technology as a better means of storing power for their home solar systems.  While that’s not much of a development in the near term, the crucial, missing keys for widespread solar power are storage and distribution.  This announcement is one more sign of improvements on those fronts.

Solar stocks have been cold this winter, but the secular summer might have arrived for the sector as a whole.