Why the Sunshine in Solar Stocks?

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May 29, 2009 9:31am ETF BASIC NEWS NYSE:USO

solarThe answer lies in the rise in oil prices. Crude prices have risen above $64/barrel, US Oil Fund ETF (NYSE:USO) is up more than 5%, and solar stocks are following along for the ride. The sentiment seems to be that demand for oil will translate into demand for energy from all sources. Even coal miner

 Peabody Energy Corp. (NYSE:BTU) has risen more than 7% in the past week. Even natural gas prices have risen above $4/thousand cubic feet on the futures market.

Rising energy prices may boost the stock market, but it is nearly equally certain that those same rising prices will kill a recovery in consumer spending if the prices rise too much. If consumers have to pay more for gasoline, they’ll spend less on everything else, including solar panels. Of course the US government could temporarily put some air under the solar makers, but that won’t last long.

The recent bull run in oil prices is most likely speculation, which makes the run-up in other energy stocks even more chimerical. Suntech is trading up more than 4% in the pre-market this morning, Canadian Solar and Yingli are up more than 2%, and Energy Conversion is up about 1%. Peabody Energy is also up more than 4%, while USO is up more than 2%.

Full Story: http://247wallst.com/2009/05/29/why-the-sunshine-in-solar-stocks-stp-csiq-yge-ener-uso-btu/

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