An upgrade to an issue may trigger an excessive move upward on days when the market is in a bull market or at least has upside potential.
Even an update to an issue in a strong sector might not have the same impact during a bear market. That unquestionably holds true for Thursday's PreMarket Prep Stock of the Day, First Solar Inc. (NASDAQ: FSLR).
Rangebound: Despite the wild gyrations in the S&P 500 index over the last few weeks, First Solar has been in a $13 trading range from $127.07 to $140.64.
When the issue reached its peak in June 2011 at $142.22, the top of the range represented a more than 11-year high. Even at that cost, it is still 50% below the all-time high of $317 set in May 2008.
The trading range's low was reached on Friday last week at $127.07, and a low the following day at $127.60 shook things up.
PreMarket Prep's Take: On Thursday, the stock was trading about a dollar higher in the lower $137 handle as it was being addressed on the broadcast.
Dennis Dick, the co-host, was not in the mood to downgrade this update. Even at a multiyear high, he said, "the relative strength in solar equities has been phenomenal and I am not tempted to short it."
Investors were informed by the author of this article that the most recent closing high for the movement occurred on September 19 at $137.04.
Additionally, traders may trigger some downside price movement if the starting print were hit, therefore remaining above it was stressed, wherever it may be.
FSLR Price Action: The issue surpassed the most recent closing high for the move after opening slightly higher. It then quickly reversed course, rallying to $138.19.
The problem goes much beyond just cutting through the opening price. In the end, First Solar dropped 3.86% on Thursday, ending the day at $130.93.