First Solar – Coming out of the Blue! Stalking The Big Game (Returns).

Investing in stocks can be about campaigns.  When I say campaigns I mean of being patient, watching and waiting before taking action.  Action comes when the market confirms the move with a positive or negative transit of our EBV lines.  I first blogged about FSLR back on April 12, 2012 when First Solar had a negative transit falling into the blue, as we say. here

I also wrote a blog post on FSLR on August 20, 2012 with the title – First Solar “Coming Out of the Blue”! (Maybe?).  I placed “Maybe” in my title because FSLR was already up 50% for the month of August and experience tells me that stocks after such a big move usually want to consolidate under EBV-3 before the actual positive transit unless there is corporate action, like a buyout, that no one can predict.  Well I guessed right, and FSLR fell back under EBV-3 after my August 20, 2012 blog post.  So I have been waiting.  Yes, waiting for 13 weeks and finally today FSLR finally broke above EBV-3 or as we say – Coming Out of the Blue”.  (Also see my Q&A about “Coming out of the Blue”)

Here is our model price chart for First Solar as of November 28, 2012.

First Solar with weekly price bars, EBV Lines (colored lines) and model price (dashed line)

As I have written many times in this blog about investment situations where the equity price of any security, I fish in the large cap pond, transits above EBV-3, I call this “Coming out of the Blue”.  “Coming out of the Blue” investment strategy is a very profitable one for those investors, traders who invest when an equity positively transits above EBV-3.  Would I place my whole portfolio into this one situation?  No!  I would diversify in names, industries and even countries.  I can only say from experience the one company you least expect will probably yield you the most profit, often times that’s the nature of investing.  In other words it’s healthy to have a bunch of companies, as many as possible, breaking above EBV-3 and you will never know which will be the most profitable.

When companies transit above EBV-3, this is a positive sign.  There can be a number of reasons for this transit, depending on the circumstances.  Also, the positive transit can occur before the positive news is publicly available.

Again my purpose here is not to recommend stocks to my readers.  My purpose is the help investors, traders and persons interested in using our Facebook application for security analysis for more profitable security selection.

As always, let’s see what happens!

2 responses to “First Solar – Coming out of the Blue! Stalking The Big Game (Returns).

  1. gaurav shah November 29, 2012 at 2:17 am

    could you share stats from the past experiences of gains in stocks once they crossed EBV-3 ? I know it may vary, but what are the usual percent gains ( following the EBV-3 crossover), say over next 30-60 days using this EBV strategy ?

    • ModelPrice Guy November 29, 2012 at 9:50 am

      Great question. The only work we have performed in this area is when a stock transits above any EBV level, we computed rates of return one year from the date of the positive transit. We then viewed the population over a period of years of say positive transits of say EBV+5. What we found out, not surprisingly, is the lower the EBV lines the stock makes the positive transit the higher rate of return of the population one year out. With EBV-3 as our last EBV line, this transit had higher rates of returns as a group then say stocks with positive transits of EBV+5. This should make sense because what this work says is stocks with lower valuations generate the highest rates of return – not exacting earth shattering stuff but the vast majority of investors seem to forget this. By focusing on positive transits of EBV-3, as I do, this puts the emphasis on the highest probability and most profitable stock ideas that we have over a period of time.
      Other than this work, which I described above, we have performed no other work in this area as per your question. Yes, it would be great to know, however we haven’t had the time to do the work. Hope this helps.

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