Those of you jumping into hot Solar stocks should hold back now as they are starting to cool down now that the solar power industry is about to deliver some bad, bad news. Yes bad news as today, analysts reported that the leading solar companies might miss expectations when they announce earnings and could very well lower their forecast and expectations for the rest of the year. This makes investing in Solar stocks not as attractive as it once was. Adding to the disappointment for the sector is the rapidly falling prices of the photovoltaic systems. With so much competition among the sector now, prices are being forced lower and amid the recession many companies are finding problems in financing new projects. A huge side affect harming the solar industry is the fact that many buyers are putting off their purchases hoping they can get a better deal down the road. Solar has become a commoditized business in which every company delivers the same product. Ultimately consumers pay per watt for solar power. With the downfalls of the recession and big corporate cuts of technology, analysts predict prices to fall from $2.50 to $2.00 per watt and falling to around $1.85 per watt in 2010. That alone will force many solar companies to lower their forecasts. With many large corporations such as First Solar (FSLR) expected to miss expectations they will most likely have to write off millions in inventories as well this fall as their value depreciates. As a result, I am becoming very bearish at least short-term on all solar stocks such as SunPower (SPWR) whose sales have dropped 50% so far this year and due to falling prices the company will most likely cut back prices from the premium numbers they currently charge. This all will spill down the line leaning towards bad news for Evergreen Solar (ESLR) and Suntech Power (STP). The only bright spot for the Solar sector would be the American Recovery and Reinvestment Act, which Barack Obama signed into a law in February. This bill will include grants for renewable energy projects, mainly solar, and helps reimburse buyers of solar energy up to 30%. The government plans to disburse around $3 billion to the sector. Plus with rising oil costs and crude expected to soar over $100 in the upcoming years, more people might turn to the clean energy. Overall though, my fundamental outlook for the next year for Solar Energy is Neutral yet leaning to the side of negative. Long-term solar will appreciate as the companies are aggressive in pursuing new product introduction and foreign expansion which has been really successful especially in China. In this solar downfall though I think the sector will see an up-haul and re-shift with many of the smaller companies merging with the large corporations in order to survive. Ultimately if you are looking to trade or invest in stocks within the next year, void Solar.