SunPower Corporation (NASDAQ: SPWR)

SunPower Corporation, an energy services company, designs, manufactures, and delivers solar systems to residential, commercial, and utility customers. It operates in three segments: the Americas, the EMEA, and the APAC. The company offers solar power products, including panels, balance of system components, and inverters. It also designs, manufactures, and sells high-performance rooftop and ground-mounted solar power systems, as well as utility-scale photovoltaic power plants. In addition, the company offers operations and maintenance services, including remote monitoring, preventative, and corrective maintenance services, as well as rapid-response outage restoration and inverter repair services. Further, it leases solar power systems to residential customers.

Take a look at the 1-year chart of Sunpower (Nasdaq: SPWR) below with added notations:

1-year chart of Sunpower (Nasdaq: SPWR)

SPWR had been trending mostly sideways from October until June. The stock had also created a clear level of resistance at that $36 (blue) during that period of time, and that level was also a 52-week high resistance. The break through that resistance led to a run up to $42. Pullbacks to $36 should provide support, which has already happened once in early July, while a break below $36 could signal the end of the run.

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The Tale of the Tape: SPWR broke out to a new 52-week high. A long trade could be made near $36 with a stop placed below that level. A break back below $36 would negate the forecast for a continued move higher.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!

Good luck!

Christian Tharp, CMT

Follow me on Twitter: @cmtstockcoach