Solar ETF TAN Defies Political Expectations with Strong Recent Performance
The Invesco Solar ETF (TAN), a leading fund tracking the solar energy sector, has demonstrated remarkable resilience and growth, recently outperforming most market sectors. Year-to-date, TAN is up approximately 16%, and it has gained about 62% since President Donald Trump’s most recent inauguration. This performance invites a closer look, as it challenges the common narrative that alternative energy investments are strictly tied to the political leanings of the administration in power.
A Historical Look: Performance Across Administrations
Analyzing TAN’s price action over the past decade reveals a pattern that often contradicts simplistic political assumptions. During President Trump’s first term (2017-2020), TAN delivered staggering returns, rallying roughly 550% from his inauguration in January 2017 to the end of his term in January 2021. This surge occurred despite a federal administration that was publicly skeptical of climate-focused policies and withdrew the U.S. from the Paris Agreement.
Conversely, under President Biden, who prioritized clean energy incentives and rejoined the Paris Agreement, TAN’s trajectory was markedly different. The ETF peaked shortly after his January 2021 inauguration and then entered a prolonged downtrend, losing approximately 70% of its value by the end of his term in January 2025. This inverse relationship underscores that market forces, global dynamics, and sector-specific cycles can be more powerful drivers than domestic political rhetoric alone.
Current Technical Setup: A Potential Trend Reversal
Today’s chart analysis suggests TAN may be in the early stages of a significant trend reversal, offering a different setup than in previous cycles.
Daily Chart: Consolidation After a Strong Run
On the daily timeframe, TAN is pausing after a robust advance. As of recent trading, the ETF is consolidating near its 50-day moving average, with price action bounded roughly between $52 and $60. Momentum indicators, including the Moving Average Convergence Divergence (MACD) and the Relative Strength Index (RSI), are showing early signs of turning positive. This suggests the recent consolidation may be a pause that refreshes the prevailing uptrend, rather than a definitive top.
Weekly Chart: A Favorable Long-Term Breakout
The longer-term weekly chart presents a more compelling bullish case for investors with a patient horizon. After a severe multi-year decline, TAN has broken out from a well-defined base formation. Key technical signals supporting this reversal include:
- The overall trend has shifted from down to up.
- A clear, significant trough has been established.
- The price is now trading above its key 50-week and 200-week moving averages.
- The breakout from the consolidation range provides a clear “something to reverse,” a classic technical requirement for a new bull market.
The Trade: Strategy and Risk Management
Based on the technical breakdown, a strategic long position is being considered with defined risk parameters.
Entry & Stop Loss: The suggested strategy is to establish or maintain a long position while the ETF trades above the critical $50 level. A stop-loss order placed just below the $45 support zone—or at a level commensurate with an individual’s risk tolerance—is recommended to limit potential downside. A sustained close below the rising 50-week moving average (currently near $45) would invalidate the bullish setup and signal an exit.
Price Targets: The initial upside target is a retest of the recent consolidation high near $60. If the breakout gains sustained momentum, a measured move target into the mid-$70s is considered technically plausible, referencing the height of the prior base formation.
Context and Cautions: Beyond the Charts
While technical analysis provides the current framework, fundamental tailwinds may support the sector. Rising oil and natural gas prices can increase the relative economic appeal of renewable energy sources. Furthermore, global commitments to decarbonization and corporate procurement of solar power create a long-term demand backdrop.
However, investors must acknowledge the sector’s historical volatility. The solar industry is susceptible to policy shifts (both domestic and international), supply chain constraints, interest rate sensitivity, and intense competitive pressures. The stark performance divergence between the Trump and Biden administrations serves as a potent reminder that political and regulatory developments can rapidly alter the investment landscape.
This analysis is based on historical price data and technical chart patterns. Past performance is not indicative of future results. The author, Jay Woods, CMT, is a Chartered Market Technician. This commentary is for informational purposes only and does not constitute personalized investment advice. Readers should conduct their own research or consult with a qualified financial advisor before making any investment decisions.
