By Doug Busch
The Invesco Solar ETF endured a steep 75% selloff from its fourth-quarter peak in 2021, at the very round $100 number, to last April. Ever since, solar stocks have shown renewed signs of life. Improving technical momentum and growing long-term demand for clean energy -- helped by higher crude oil prices -- are attracting investors back into the formerly beaten-down sector. Several solar stocks are attempting to break out of major bases, raising the possibility that a broader recovery may be getting under way.
Two companies with good setups are First Solar and SolarEdge Technologies. A third, Nextpower, reports earnings after today's close. It has advanced in five of the last six reactions. Nextpower moved above the bullish ascending triangle pivot of $130 in yesterday's session.
First Solar, the largest holding in the TAN ETF at 10%, is up 22% over the past year. It rose 6% yesterday and is looking for its first four week winning streak in six months. The stock trades 18% below its 52-week high and is nearing the top of the weekly range. The chart is beginning to show some encouraging green shoots, with the 50-day simple moving average curling higher for the first time in four months:
The stock also reclaimed its 200-day simple moving average yesterday. Attention now shifts toward a developing double-bottom pivot at $251.09. Relative strength has largely flatlined against solar peers over the last two months, though bulls will look for that trend to reverse as the technical picture improves. The stock has acted constructively since a bullish MACD crossover in early March, signaling momentum may be shifting back in favor of buyers.
Candlestick activity has also played an important role in identifying key turning points. The stock flashed warning signs near the top above $250 after forming seven doji candles in November and December. More recently, a bullish morning star pattern completed on March 9, preceded by a doji on March 6. Monday's rally also filled an upside gap left from the Feb. 25 session.
From current levels, a move toward $350 by early 2027 would imply 50% upside potential. Remain bullish above $221. First Solar was trading around $230 Tuesday.
SolarEdge Technologies is up 130% over the past year but trades 22% below its 52-week high. The last seven weeks it traded within the combined 50% advance that occurred during the weeks ending March 13 and March 20. Looking at the chart, a bullish falling wedge pattern is forming on the ratio chart against the TAN ETF:
The stock has found support at its 200-day simple moving average since June, when the long-term trend line began sloping higher. The stock recently attempted to break out above a bull flag near the very round $50 level, but that move was rejected following a doji candle on April 1.
I believe one can enter here and add to on a reclaim above the former break above a cup with handle trigger of $44.53 taken out on March 18. Notice the base started after a bearish evening star pattern completed on Nov. 12. From current levels, a move toward $65 by year-end would represent 55% upside potential. Remain bullish above $37. SolarEdge Technologies was trading around $40 Tuesday.
Doug Busch is the senior technical analyst at Barron's Investor Circle . His technical view is added to stock picks, including those published exclusively for Investor Circle readers. A glossary of technical terms is updated regularly with new entries.
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
May 12, 2026 11:30 ET (15:30 GMT)
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