In last night’s post, I noted that I considered entering FSLR on it’s breakout, but decided against it because volume was not as strong as I would have liked on the break. Today, the stock headed lower on earnings (although it did not violate the previous breakout support level). This is a good example of how important volume is. Volume is what propels momentum stocks. When I see a move without volume, I become concerned.
While this is probably not the time to trade FSLR, the stock will remain on my watchlist, where I will watch two key points. If the stock breaks out over $121 on strong volume, I will enter. If it breaks down below $105 on strong volume, the breakout will be invalidated and the stock would go on the short watchlist (although the exact short point might be below $100, since that is where the stock was basing before the breakout. Until then, the stock is in no man’s land, and is only a trade if you are well versed in trading range strategies.