The Invesco Solar ETF (TAN) has outperformed in almost every sector except energy. Solar ETFs are up 16% since the beginning of the year and 62% since President Donald Trump took office. This may come as a surprise to some, as the concept of alternative energy has been a political game for more than a decade. It would be fair to suggest that one party is more open to solar power and alternative energy than the other. It’s no secret that the left tends to favor green incentives more than the right, but stock price performance doesn’t tell you that. This is where charts come in handy. Charts filter out political noise. One of the important factors that investors should be aware of is price volatility. Price is a fact and you may be surprised to see what it is telling us now. Many people may not realize that during President Trump’s first term, TAN approval ratings reached up to 550% between his inauguration and his departure. I had to go back and reread that line myself and the numbers skyrocketed. Under President Joe Biden, it was quite the opposite. Mr. TAN hit a high immediately after taking office and has been on a downward trend throughout his term. Stock prices have fallen by up to 70% during his tenure. That brings us to today and the strength we’ve seen in this area since President Trump returned to office. We are reversing the trend and things are looking brighter. Let’s analyze the chart. Setup The daily chart shows a strong uptrend that has paused over the past few days. The stock price that entered today’s trading is consolidating between $52 and $60, with the 50-day moving average as the near-term axis. The MACD and RSI momentum indicators have turned positive, indicating that the recent pause is likely to cause the trend to rise again. Next, the weekly chart has long-term settings. This is where this deal looks attractive for those with a longer term and a little more patience. The stock price has risen considerably, but the outlook is important. It just broke out and the risk and reward are very favorable. This checks all technical reversal boxes. The overall trend has changed. We have a definable low, we are currently trading above the major moving averages, and most importantly, we have something to reverse. The trade will be long and stay above $50 for a long time. To limit your losses, use a stop below $45 or your personal pain threshold. If the stock price falls below the 50-week moving average rising around $45, the trade will be suspended and it will be time to move on. What are the advantages? This is what we like. Look for stocks to break above the recent high of $60 and move higher. We’ve seen this sector make big gains in the past, and it’s poised to make a leap here as well. Given the recent departure from this long-term formation, a goal of mid-’70s is realistic. Overall, there could be significant tailwinds from rising oil prices and people looking for cheaper alternatives. Whatever the underlying situation, trends cannot be ignored. As the weather warms up, it may be time for a tan. — Jay Woods, CMT of Chase Games Disclosure: None. All opinions expressed by CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, its parent or affiliates, and may have been previously disseminated on television, radio, the Internet, or another medium. This content is provided for informational purposes only and does not constitute financial, investment, tax, or legal advice or a recommendation to purchase any securities or other financial assets. The Content is general in nature and does not reflect any individual’s unique personal circumstances. The above may not be appropriate for your particular situation. Before making any financial decisions, you should strongly consider seeking the advice of your own financial or investment advisor. Click here for full disclaimer.
