First Solar, SodaStream Stocks Look Set to Pop

Previous pullbacks to their 40-day moving averages have proved bullish for these two names

Sep 7, 2017 at 11:55 AM
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While there's no shortage of uncertainties looming over the market right now, there are still plenty of trading opportunities out there for stock pickers. Two names with compelling charts right now are alternative energy issue First Solar, Inc. (NASDAQ:FSLR) and at-home beverage system specialist SodaStream International Ltd (NASDAQ:SODA), as both stocks test a key trendline with historically bullish implications.

FSLR Bounce Could Spark Short-Covering

First up, FSLR is trading at $47.27, with its 40-day moving average docked at $46.93. Looking back at the past three years' worth of data compiled by Schaeffer's Senior Quantitative Analyst Rocky White, previous tests of this trendline have yielded positive five-day returns 100% of the time, with an average gain of 3.48%.

It's more of a coin flip looking out at the 21-day returns. FSLR has been higher only 50% of the time after testing support at its 40-day, but the average return over this time frame is 4.71%.

The stock's current uptrend looks fairly solid, which could tilt the odds in the bulls' favor again this time around. Additionally, there's ample opportunity for FSLR to benefit from short covering activity. Currently, short interest accounts for nearly 14% of the stock's float, or 6.7 times FSLR's average daily trading volume.

fslr 40 day moving average 0907

SODA Options Cheap Ahead of Likely Trendline Bounce

As for SODA, the shares are positioned at $58.14, just pennies below their 40-day moving average at $58.43. Previous meet-ups with this trendline have been a boon for SODA stock, with six prior signals yielding an average five-day return of 1.24% (with 67% of those returns positive).

Looking at the 21-day performance, SODA is again positive two-thirds of the time. However, the average return is a substantially more bullish 7.63%.

For traders hoping to capitalize on another SodaStream rally from its 40-day moving average, now is an appealing time to buy short-term options on the stock. Schaeffer's Volatility Index (SVI) of 40% ranks lower than 80% of other such readings from the past year, meaning SODA's front-month options have priced in lower volatility expectations only 20% of the time.

soda 40 day moving average 0907

 

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