Unusual volume was detected today in First Solar stock. First Solar is in deep oversold territory as the RSI of 25 indicates. FSLR stock had heavy activity in the AUG $60 calls too.

FSLR chart in deep oversold territory

The plunge in First Solar stock was caused by China cutting solar incentives for the rest of 2018, which could reduce the country’s solar installations by 30%-40% in 2018. China accounted for nearly half of all solar panel sales worldwide in 2018. China’s actions will likely cause an oversupply of solar panels and as such the price of solar panels will likely fall.

First Solar has nearly 80-percent capacity contracted through 2020, so near-term module pricing pressure driven by the Chinese should be minimal.

Still, investors sold out of all solar panel stocks after the big news out of China.

I’m not adding FSLR to any buy list as I’m on the fence about it being a good long-term hold. However, as a quick oversold swing long, I think it fits the bill. I also like the fact that we have a clearly definable stop loss level too.

Disclosure: As Premium members know, I bought FSLR stock today.

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