Evergreen Solar (NASDAQ: ESLR)

Market sentiment: Bullish

Stock price of U.S solar panel maker Evergreen Solar Inc is increasing after the company announced on Tuesday that it signed a sales contract worth about $1.2 billion with German-based IBC Solar AG. Solar panels will be manufactured at Evergreen’s new plant in Devens, Massachusetts, and at a new facility scheduled to open in 2010.

As per the stock chart pattern, this looks bullish in midterm time period. After hitting low at $7.5 in March, this is ranging from $7 to $12. Looks like ESLR won’t fall too much and it could be a good time to do bullish hedge trade. Technical chart pattern shows that midterm looks bullish. The reasons are:

• Currently price is just going above the nearest bottom level, forming an upward wave.
• Price is nicely ranging from $7 to $12.5 and every time this is making higher lows and higher highs.
• Nearest support is seen below $9 and resistance above $12.

So, considering the above technical and fundamentals, we could go for September bull-put credit spread below $7.5 range. This trade will make a 10% return in seven to eight weeks as long as ESLR is above $7.5 at September expiration.