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Friday critical for TSL

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forecast_down September 9, 2011 (Chinavestor) The oversold monitor picked up six Chinese solar makers this morning, stemming from Jinko Solar (NYSE:JKS) to Yingli Green Energy (NYSE:YGE) and LDK Solar (NYSE:LDK). Trina Solar (NYSE:TSL) fell for six day in a row by Friday and is trading way below its moving averages. But should the fall continue, chances are that the recovery will be slow and gradual. However if Trina Solar (NYSE:TSL) breaks the loosing streak today, it will have an excellent upcoming week, if history was any guide into the future.Here is why. A quick look into Trina's fortunes lately. The stock fell to a third of its value in less than six months and is trading below short and long term technical indicators as well.

TSL_201199

But a six day loosing streak certainly raises eyebrows. The stock has been falling since August 30 and is trading lower at 11:00 A.M. on Friday. This will be the 7th consecutive days of falling unless things turn around. Investors want to know at this point: what's NEXT?

We went back in time and collected all long, consecutive declines of Train Solar (NYSE:TSL) since its IPO. Here is our findings.

Key to the table:

  • Third column is "Loss [days]" marking those periods when the stock fell 5 or more days in a row since Dec. 2006.
  • "Next Day" is how much the stock jumped after the loosing streak
  • "Next 5 Days" is the total return the stock delivered for the five days after the loosing streak

TSL_table_201199

Summary of table:

  • There was once instance that Trina Solar (NYSE:TSL) fell for 9 days in a row, back in early 2008. The stock did not recover the next week, remained under pressure for most of the year in fact.
  • There were two instances since December 19, 2006 that Trina Solar (NYSE:TSL) fell 7 days in a row. Both times the stock recovered somewhat the next day but was trading sideways throughout the upcoming week/5 days.
  • There were two instances when Trina Solar (NYSE:TSL) fell for six days in a row. The good news is that the stock came back very strongy the 7th day! And in one of those instances the recovery lasted well into the next week!
  • Five days loosing streaks were relatively common for Trina Solar (NYSE:TSL) in the past. Eight times out of those nine instances the stock had a VERY STRONG 5 days following the decline.

Right now chances are that Trina Solar (NYSE:TSL) will record its 7st. straight daily loss. That said recovery will be slow and investors should wait at least for the week after before touching this stock again IF and IF history was used as a guide.

Regarding the rest of the sector, Yingli Geen Energy (NYSE:YGE) broke the negative cycle two days ago along with LDK Solar (NYSE:LDK). But it doesn't necessarily mean these stocks are out of the woods yet.

Related story: Will LDK pull a CSUN?



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