Solar: Outshining the Market (w/ Patrick Dunuwila) | Trade Ideas

TL;DR

Patrick Dunuwila of The Chart Report is bullish on Sunrun stock (RUN) due to the outperformance of solar stocks and the breakout potential of the company. He recommends buying at $17.13 with a stop loss at $16.10 and a target price of $21.16 over the next three months.

Transcript

JAKE MERL: Welcome to Trade Ideas. I'm Jake Merl, sitting down with Patrick Dunuwila of The Chart Report. Patrick, great to have you back on the show. PATRICK DUNUWILA: Thanks for having me. JAKE MERL: So, what are you looking at in the markets right now? Are you currently bullish or bearish? Because I remember last time you were here, the 200-Da... Read More

Key Insights

• 🚄 The markets are experiencing sideways price action, but this may be a correction through time within a primary bull market.
• 💄 Solar stocks, represented by the TAN ETF, have been outperforming the S&P, making them an attractive area for investment.
• 💁 Sunrun's stock stands out within the solar sector due to its relative strength, a breakout potential, and a large base formed since last June.
• 🧑‍🏭 Technical factors such as the coiling price action and resistance breakout on a relative basis support the bullish thesis on Sunrun.
• *️⃣ The key risk to the bullish thesis is the broader market risk and potential whipsaw movements. Obeying risk levels is crucial for a successful trade.
• 🧘 The suggested time horizon for the trade is the next quarter, but it is important to monitor and reassess the position based on the risk levels.
• 🎯 The trade recommendation for Sunrun stock is to buy at $17.13, with a stop loss at $16.10, and a target price of $21.16, potentially overperforming this target.

Questions & Answers

Q: Why does Patrick Dunuwila believe the market is still in a primary bull market despite sideways price action?

Dunuwila considers the last two years as a correction through time, suggesting that the lack of significant progress may indicate consolidation before further upward movement.

Q: What technical factors make solar stocks attractive, according to Dunuwila?

Dunuwila mentions the outperformance of solar stocks compared to the broader market, breakout potential due to long-term resistance on a relative basis, and a growing frustration between buyers and sellers indicated by the coiling price action.

Q: Why does Dunuwila recommend Sunrun over other solar stocks within the ETF?

Dunuwila emphasizes that Sunrun's chart setup looks the best, particularly because it is knocking on the door of all-time highs and breaking out of a long-term base formed since last June.

Q: What are the key levels and targets for trading Sunrun stock?

The suggested entry point is at $17.13 with a stop loss at $16.10. Dunuwila's target price is $21.16, derived from a Fibonacci extension, but he notes that the stock may go even further. He recommends reevaluating the position and possibly taking profits at that level.

Summary & Key Takeaways

• Patrick Dunuwila believes the markets are experiencing sideways price action but still in a primary bull market.

• He identifies solar stocks, particularly the ETF TAN, as an area of the market that is outperforming the S&P and presents opportunities.

• Among the solar stocks, Sunrun stands out due to its relative strength, knocking on the door of all-time highs, and showing signs of a breakout.