JL: Wow, what a week! First the broad market got hammered, then the Fed rode to a $200 billion rescue… bankruptcy rumors flying, the state of New York in political turmoil… the hits just keep on coming.

CASH: Ain’t it great? All this volatility is a trader’s dream. Just so many different ways to make money.

JL: So you’ve got your finger on the pulse of this madness?

CASH: So far, at least. I banked some serious profits on a few short positions earlier this week. No doubt there’ll be a chance to ring the register on some longs in the next few trading days.

JL: Glad to hear it. The financial press has been harsh on IPOs and new issues lately, so it’s nice to know the picture isn’t all dark.

CASH: Far from it. In fact, when things are looking dark, I like to head for the light.

JL: The light at the end of the tunnel?

CASH: Nope. I’m talking about sunlight.

JL: Sunlight? You mean the detergent?

CASH: Now you’re just being difficult.

JL: Who, me? All right, I’ll stop. Why don’t you go ahead and “enlighten” us.

CASH: Hoo boy… I’ll just pretend I didn’t hear that. You know I’m talking about solar power. As you also know, the sun is our ultimate energy source. There won’t be any worries about “peak sunlight” -- at least, not for another few billion years or so. Solar has a big future, thanks to a combination of government support to reduce dependence on fossil fuels and innovative technology advances at the margins.

JL: Sure. The Taipan team has booked some nice profits in the alternative energy space. One or two of our editors are practically experts on the subject.

CASH: No surprise there. I know that alternative energy is one of the big sweeping trends Taipan sees potential in. There have been some amazing IPO opportunities in solar, too.

JL: I know solar stocks overall have gone on a wild ride. They were setting the world on fire in 2006, then ran into investor fatigue and got whacked in late 2007. Now it looks like solar could be gearing up for another run. Are you loaded up for the next wave higher?

CASH: Actually, I don’t own a single solar stock right now.  I bought LDK Solar back in the day, along with JA Solar, Canadian Solar, First Solar, and probably another two or three I can’t remember.  As you say, all of them had incredible runs and offered great opportunities to make money.

JL: But you say you don’t own a single one right now?

CASH: Not a one. Remember, I’m a trader first and last.  I get in when the getting is good, and then I get out quickly and move on.  I’m not a day trader per se, but I don’t let grass grow under my feet.  Most of these names can’t handle more than several months of rapid price appreciation before they have to take a break.

JL: That certainly looks true for LDK solar. Let me just pull up a chart here…

JL: Wow, what a roller coaster! Two separate runs up to 80 bucks, with major waterfall-style declines in between… starting from $25 or so, that’s a 200% gain on two separate occasions, giving it all back each time.

CASH: Yep. So you see my point there. If I want to take a ride like that, I head to Disney World. Personally, I don’t see the appeal in holding a stock like that for the long term.

JL: So what’s your solar game plan?

CASH: Stick and move, baby. Buy low and sell high, then turn around and do it in reverse. Short ‘em high and buy ‘em back low.

JL: Does that mean you’re actually shorting solar now? It seemed to me that we’re back around to the buying part of the cycle, when a lot of names have been beaten down.

CASH: Ah, but not all solar stocks are alike, my friend. Many have been beaten down, but not all. I have a bearish eye on one pick in particular.

JL: Do tell.

CASH: The name is First Solar, symbol FSLR on the Nasdaq. It’s an industry darling, and one of the last solar stocks to fall. While LDK is hitting new all-time lows, and JA Solar just took out its October low, First Solar is just getting started.

JL: Doesn’t that make you nervous, picking on the strongest name in the group?

CASH: Normally it would. And you know I’m always careful as a matter of habit. But I think this is a good play with tight risk control in place. And as you know, bear markets work differently than bull markets.

JL: Of course. I think I know what you’re driving at, but go ahead.

CASH: Well, you know that expression, “a rising tide floats all boats.” But bear markets are different. They are more like, well, a lion or a tiger hunting a herd of gazelle. The herd of gazelle doesn’t get eaten down all at once. They get picked off one by one -- weaker and slower ones first, stronger and faster ones last.

JL: Someone call the Discovery Channel. So in the stock world, you’re saying it may take some time for the bear market to hit each name in a group, but over time chances are good that the highfliers will take their lumps, too.

CASH: Right. Like a cheezy horror movie, we are seeing solar stocks get taken out one by one. My bet is that FSLR will be one of the next to get hit.

JL: It looks like the $200 area is a battleground for First Solar. On Feb 13, the stock gapped well above. Then just recently there was a nasty 10% sell-off to $180. And, as of this conversation, the stock has popped back above the threshold to $205 or so.

CASH: Yep, and you know my style…. I like to know that a name is on the move before I jump in and commit capital.  Any sustained weakness in FSLR gets the ball rolling. If that $200 level fully gives way, it could be difficult for the bulls to support the stock.  So what started out as a super-hot IPO that gained over 1,000% in the first year of trading is now a short target as the orbit stalls and the stock threatens to come crashing back down to earth.

JL: It can be a harsh game, no doubt about that. If it happens, imagine the disappointment of those who have held FSLR for the entire run. All those sweet gains evaporated as the stock mimics LDK and takes a nose dive. You were originally a bull, too, right?

CASH: You bet. FSLR was a great winner for me on the long side. But as my old mentor used to say, “Cash, you have to trade them like the little slips of paper that they are.  You can’t grow attached to the company.  At the end of the day, it’s all about what’s written on the buy and sell tickets that litter the trading floor.”

JL: Except in the next few years, there probably won’t be any more trading floors.

CASH: True. The point remains, though, that to profit in all market environments I have to stay detached. It’s no good developing an emotional commitment to an investment or a trade. I’ve got to stay nimble and keep my dukes up.

JL: Well said. Switching gears a little, are we going to some new IPO action anytime soon?

CASH: There’s only one deal on the calendar this week. It’s a small cleaning service, of all things. While it will probably do just fine, the company is really too small for me to worry about. Next week, on the other hand, is shaping up to have some life in it.

JL: How’s that?

CASH: It still looks like Visa, the Big Daddy of all IPOs, will be pricing on the 20th of this month. Two other IPOs will be pricing the same week. And if the market is successful in holding the January intraday lows, look for a bunch of additional deals to quickly come to market next week or the week after.  Who knows, I may even be able to start targeting several names at once!  I’ll keep you posted.

JL: Looking forward to it as always. And hey, you know that light at the end of the tunnel we were talking about?

CASH: Yeah…

JL: Just make sure it isn’t a train.

CASH: You should be in a nightclub with that routine. Catch you next week!