The recent resurgence in the share prices of the chinese solar companies (we exposed the financial weaknesses of these companies last summer when the shares were at their all-time highs), lends some credence to the view that the recent market rally is set to top out soon. Of course, it’s possible that this time may be different, but in the past, rallies in these names has coincided with market tops, as these are truly junk companies, nearly all of which are already bankrupt if one takes basic financial rules into consideration.

The rally in the shares has been sparked by the announcement of future subsidies from the Chinese government to support the growth of the local Chinese solar market. Since I can’t read Chinese, I can’t possibly comment on the effects that the Chinese solar plan may have for the China solar market both in the near and long term. However, at the same time, I am reasonably confident that not one analyst on Wall Street who covers these names can actually read Chinese either, so it’s doubtful their bullish comments on the group, which in the past have cost investors tons of money, have any credence. Moreover, has Obama’s much touted alternative energy plans helped any of the US solar names, e.g. ENER, stage a sustained rally? I’m not sure one can base any investment decisions on government subsidy programs, given how corrupt and fickle all governments actually are.