First Solar (FSLR)
Update (11/9/07)

Hopefully, FSLR will continue to be the gift that keeps on giving.  As always, when playing this stock, caution is advised because of the high volatility.  Options are best to limit risk, especially since we a proposing another short play.

On Thursday, FSLR leapt an incredible $63 to a $230 high.  A high at 230 counts well for the wave pattern we see depicted above.  Fractally speaking, we still can't absolutely rule out a retest of 230 and higher high if the stock moves above 214.35 resistance.  So consider that caveat #1.  Caveat #2 is the possibility of only a fourth wave pullback, and in that scenario, the stock should hold support in the 197-194 area.  A break of 200 offers perhaps a riskier entry, and the result may just end up being a day trade.  But if a top is in, then the risk justifies the potential reward.  The idealized model would be a top in place, and a typical Elliott Wave correction to return to the site of the previous fourth wave, in this case back to 141.  As such, if the stock topped out, this could be a lucrative trade, for those who don't mind taking on some risk.  A conservative entry, and one that would increase the probability of the lower retracements, is awaiting a break through 194.  The gap here would likely be filled, towards support at 173.93 (where it occurred), lower support at 161 and the ideal 141 area target.  Breaks of support can used as resistance, though you may want to use a money stop based on your own risk tolerance.

December and March are the closest option months.  The March 08 130 Put (symbol QHBOZ) was selling for $8.70, which is way OTM, but was still up over 50% today just on the stock's high volatility.  If we're right, it should still pay quite well. 

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