If you were lucky enough to be in an American Community (OTCMKTS:ACYD) position anytime before October 8th, then congratulations - you're up big. Now get out. Instead, use freed-up that capital to take on a position in Real Goods Solar, Inc. (NASDAQ:RSOL), which looks like it's at the beginning of a good-sized rally.
Admittedly, suggesting ACYD is due for a pullback or recommending RSOL as a long may feel a little uncomfortable. American Community shares have been one of the market's hottest stocks of late, rallying 350% in a little over a month, while Real Goods Solar shares have been suspiciously tepid of late, even though most of the solar industry's stocks have been getting some traction. The basic explanation is, nothing lasts forever.
Yes, at first glance ACYD is a big mover. Take a closer look at the chart though. Though it's been on the way up since mid-September, the volume has been waning the whole time. Indeed, the bullish volume has been almost non-existent the last couple of weeks, and has ground to a halt this week. American Community are still coasting higher, but a ceiling seems to have developed around $0.049, and the bears don't seem interested in giving up any ground beyond that line. That red flag is an omen that the tide is turning.
And Real Goods Solar, Inc. is a better choice? As a matter of fact, it is.
If the ticker RSOL rings a bell, it may be because it's been recommended as a budding buying opportunity (by yours truly) a few times since early September. The premise was always the same - the stock pushed off the 200-day moving average line (green) early last month, and continued to make higher highs and higher lows in the meantime, using shorter-term moving average lines as floors as they were crossed.
The clincher RSOL, however, came today with the move above a key ceiling at $3.05. You'll also see something that's even more important unfolding here... the buying volume is on the rise; it has been since early September. That volume inflow along with a willingness to carry this stock to new highs (finally) gets Real Goods Solar over a major hump.
Just bear in mind that both outlooks are short-term trading outlooks, and not long-term calls on either stock.
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