What's next for solar? [SPWR]

In this post I called nearly the exact bottom for the photovoltaic solar panel manufacturers.  In that post I wrote: "I generally avoid discussing particular sectors or stocks on this blog but I just have to point out that solar is a screaming, flaming buy.  It is now exactly at the levels that Prechter predicted many if not all stocks would go: down to about 5% of their real worth.  One of my favorites for the coming big bounce is Sunpower (SPWR)." At the time of that writing, SPWR was trading at $3.77.  Today it closed at $19.64.  Not bad at all!

But now I see a possible setup in SPWR that I want to discuss.  It is not a 100% given but we will know within a couple weeks if I am right or wrong about this.  First off, the current chart for SPWR is shown below.  As you can see, a potential double top has formed.  If the shares go more than a couple bucks higher than the last peak of nearly 24 (back in mid 2011), I'll reconsider what I am about to write immediately.  However, I see 5 waves up and so I think it's probably time for buyers to pause and probably take some profits.  That means I expect a pretty sizeable pullback to occur reasonably soon (within weeks).

Let's say I'm right about that.  Let's say the momentum moves elsewhere in the market for the hot, leveraged money that Bernanke is driving into the market (or there is a broad pullback for some reason).  If that happens, I do not see a full smack down of SPWR back to $3 or $4.  Neither do I see a rapid "vee" style pull back.  Instead, I think the shares will pull back as shown (hand drawn into the chart and pointed to by ????).  In other words, A fairly quick $3 retracement and then a more gradual continuation pull back to the $12-$13 range that forms a curve as shown.  It could also form a down sloping channel at about 30 degrees down and to the right.

You don't know how many times I have seen this before but trust me, if it happens like this, it will be very bullish for the shares.  What that pattern below represents is a so called Cup With Handle formation.  In Elliott wave parlance, the right side of the cup "wall" is actually a wave 1 up.  Then the "handle" portion of the formation is a sideways wave 2 retracement, probably only to the 38.2 fib.  What I expect to see if we get a cup with handle is an eventual breakout into a 3rd wave whose height will be the depth of the cup at least.  In other words, the stock will go from $12 or $13 to $3o or $35.

A couple of things should be crystal clear in any case: the solar market is clearing itself out right now.  Bankruptcies and consolidations are happening.  The US is playing the protectionism game (massive tarrifs on Chinese solar panels) and that will be positive for First Solar and Sunpower.  Inflation is going to happen and it will certainly push up electricity prices.  Residential solar installations should really take off in the next 3 years and Sunpower is going to get a huge economic infusion as a result.  This is when not if IMO. I will be waiting for that dip and watching the volume to determine if it matches up to the cup with handle model very well.  Trust me, if this looks like a C+H in 6 months to a year then you definitely want to be on board when that 3rd wave up hits.

Of course, all bets are off if a world war breaks out or if the COMEX defaults or if they catch Obama's cronies doing more dasterdly illegal $hit or if Japan's interest rates begin to signal a slip into hyperinflation or someone sets a dirty bomb off on Wall St. or one of many other things that are very possible given the complete disfunctional state of global finance...