FSLR's 40-day moving average has propelled the security higher several times before
The shares of First Solar, Inc. (NASDAQ:FSLR) are up 2.8% at $89 at last check. And while the solar panel manufacturer has been cooling off from its Nov. 30, nine-year high of $98.45, it still sports a 60.3% year-to-date lead. Even better, the equity's latest pullback just put it near a historically bullish trendline, which could propel FSLR higher in the coming weeks.
More specifically, First Solar stock just came within one standard deviation of its 40-day moving average, after spending roughly two months above the trendline. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, seven similar signals have occurred during the past three years. One month later, FSLR enjoyed a positive return more than 80% of the time, averaging a gain of 7.1%. From its current perch, a move of similar magnitude would put the security just above the $95 mark -- within a chip shot of its November peak.
Analysts are pessimistic toward First Solar stock, leaving plenty of room for upgrades and price-target hikes going forward, which could give the security a boost. Of the 12 in coverage, eight carry a tepid "hold" or worse. Plus, the 12-month consensus price target of $84.09 is a 6.2% discount to current levels.
A short squeeze could create even more tailwinds for the security. Short interest rose 7.1% in the most recent reporting period, and the 7.97 million shares sold short account for a substantial 8.9% of the stock's available float, or nearly three days' worth of pent-up buying power.
Now looks like the ideal opportunity to take advantage of FSLR's next move with options. The security's Schaeffer's Volatility Index (SVI) of 49% sits in the relatively low 18th percentile of its annual range. This means the stock currently sports attractively priced premiums.