Swinging Into First Solar

The one trade I've stepped into on the swing side is First Solar (FSLR). The stock is in a wedge formation, so it could break either way; however, stochastics are retesting the midline while the Relative Strength Index is still holding in a consolidation formation. I am long 100 shares while also being long the weekly June 7 $51 call and short 1x each of the June 7 $53 and $54 calls. I am really just looking for FSLR to close the week over $52 to take in a profit. I can profit, however, from just a few days passage of time if the stock remains in the $52 to $54 range or shoots significantly higher.

First Solar (FSLR) Source: StockCharts.com View Chart » View in New Window »

The one risk I see is volatility. Yes, tomorrow is Tuesday, but there is a concern on the VelocityShares Daily Inverse VIX Short Term ETN (XIV). The XIV has one big yellow flag that continually repeats; I've appropriately outlined it in yellow. Notice how in at the end of December, again at the end of March, and once more in mid-April, XIV sharply dropped. It recovered, but the drop happened over several days and each one has lost about 20%. Each time the S&P 500 has been hit for 3% to 4% so we aren't looking at terrible results. Given the decline in the SPDR S&P 500 (SPY) already, one may be better off looking at getting long volatility or shorting XIV if equities start to break lower again....10 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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