Don't Ignore This Chart!

Solar ETF Reverses near Key Level as Momentum Turns


The Solar Energy ETF (TAN) has been one of the weakest industry group ETFs over the past year and that looks set to continue with the recent breakdown. The chart shows TAN bouncing with the market from mid February to mid March and hitting resistance near broken support. This is a classic tenet of technical analysis: broken support turns into resistance (and vice versa). The ETF challenged resistance twice in March and then broke support with a sharp decline the last two days. 

The indicator windows shows momentum turning down and the ETF underperforming the broader market. MACD turned positive for several days in mid March, but then moved below its signal line today (black line crossing below red line). The price relative (TAN:SPY ratio) hit new lows in January-February, bounced into early March and then turned back down the last few weeks. The bulk of the evidence on this chart is clearly bearish and points to a test of the February low, or even a new low. 

Thanks for tuning in and have a good day!
--Arthur Hill CMT

Plan your Trade and Trade your Plan

Arthur Hill
About the author: , CMT, is the Chief Technical Strategist at Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed market technician. Arthur has written articles for numerous financial publications including Barrons and Stocks & Commodities Magazine. In addition to his Chartered Market Technician (CMT) designation, he holds an MBA from the Cass Business School at City University in London. Learn More
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