Solar stocks climbed on Tuesday to push the Invesco Solar ETF (TAN) up more than 5.0% to $86 that still represents a close to 20% decline year-to-date. In comparison, XLE that tracks the legacy energy companies is up nearly 50% this year.
Evidently, investors have two possible ways to play the energy sector from here; they can either switch to solar stocks in hopes of a further upside or stick to fossil fuels in hopes that the rally is not over yet.
Matt Maley is watching the 200-Day MA in TAN
According to Matt Maley of Miller Tabak, investors interested in solars should wait until TAN breaks above its 200-Day moving average. On CNBC’s “Trading Nation”, he said:
TAN has bounced off the $77 level (higher low) several times recently. Now we have to see it make a higher high. So, if it can break above its 200-Day moving average in a meaningful way, that’ll give it the upside momentum to play catch up with the rest of the energy sector.
The 200-Day MA currently stands at around $90 level.
Gina Sanchez also picks renewables over fossil fuels
During the same interview, Chantico Global’s Gina Sanchez also favoured renewables as a better pick for long-term investors than the oil and gas companies. She said:
XLE is coming out of a deep trough. Oil and gas companies have had a terrible decade. It hasn’t been a great bet because it lacks the long-term driving factors whereas the long-term story for renewables and energy transition is still there.
Sanchez sees the dip in alternative energy as a buying opportunity for investors.
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