This Solar Play is Your Best Bet at This Point (RSOL, LDK, FSLR)

There's no denying that LDK Solar Co., Ltd (NYSE:LDK) has been a notable laggard this year compared to performances from First Solar, Inc. (NASDAQ:FSLR) and Real Goods Solar, Inc. (NASDAQ:RSOL). RSOL is up nearly 180% year-to-date, with a decent chunk of that gain unfurling in just the last couple of months. FSLR is up 25% for the year so far, though that more modest gain would have been much bigger had it not been for February's 24% plunge. Meanwhile, LDK shares are down 22% year-to-date, and have barely even blipped despite the fact that solar energy has become all the rage again in recent months.

As they say, though, nothing lasts forever. That includes relative strength. While First Solar and Real Goods Solar are still both compelling ideas in their own right, it's LDK Solar that may be offering newcomers to the revived solar craze their best shot at big gains... and it's the chart more than the company's results that cueing up the opportunity.

Forget the daily chart of LDK - it's too erratic and choppy to handicap anyway. Rather, take a step back and look at a weekly chart of this small Chinese solar panel maker. Although shares have gone nowhere on a net basis since the beginning of the year, they've still been making progress towards a key, catalytic event. It may be about time to unleash all the energy that's been brewing.

The clue is the shape of the chart going back to late-2012. It's a converging wedge pattern. LDK Solar Co. has been bouncing around within the confines of those boundaries, but as of right now, there's no room left to bounce around - something's got to give. Indeed, it may have already given. Though just barely, LDK spent more than a little time above that upper boundary last week, and is getting comfortable above that falling resistance line this week. Given that it was already finding support at its key long-term moving average lines before the test above the upper side of the wedge shape, we can take the bullish clues at face value. Throw in the fact that the volume behind last week's and this week's (so far) bullish efforts has been decidedly stronger, and you get a lot of things working in LDK's favor. 

As for an upside target, LDK Solar Co., Ltd could move above $3.00 before hitting a significant headwind.

If you'd like to get more trading ideas and insights like this one, sign up for the free SmallCap Network daily e-newsletter. It's full of stock picks, market calls, and more.