Think of Solar Like a Dance Move from the 1920s

Solars have been out of favor for so long it is hard to remember when, exactly, they were actually in favor. But like a dance move from the 1920s, they could become fashionable again after an extended period in the wilderness. 

First and foremost, the energy complex sustaining some type of rally this summer would be a tailwind for the solar sector, in all likelihood. But that condition may not be sufficient for a solar rally anyway, since we have seen plenty of instances in recent years where energy rallied and solar did not. 

Thus, we want to go right to the source of the issue. 

Today, domestic solar SunPower (SPWR) is shooting higher above its 200-day moving average after basing just below it for a few weeks. This is clear technical progress in favor of bulls.

And now comes the test to see if the rally can broaden out. Specifically, First Solar (FSLR), another U.S.-based solar, is forming a massive cup and handle bullish setup with price already above its 200-day moving average, seen on the daily chart below for FSLR. If bulls can push over $38 now I would be looking for solars to sustain another move as well, given FSLR's prominent role in the space. CSIQ JASO JKS are a few foreign solars also showing notable strength of late.

For a few quarters now, at least, we have been rather cautious in terms of getting involved with solars and recently energy stocks, as a whole. However, it is always good to keep an open mind in markets. And if solars are going to continue to show steady technical progress then we are more than willing to adjust.