Friday, August 9, 2013

Green With Envy

Many alternative energy or "green" stocks have been stellar performers over the last 6-12 months if not longer. Although there have been times in the past when these stocks were left for dead, expected to die and whither into bankruptcy, more than a few have done anything but that.

As for solar stocks, on June 28th I wrote a blog post entitled "I love this chart," where I listed several reasons to be bullish about the Guggenheim Solar ETF (TAN).

TAN has increased by 13.5% in that time, surpassing the 6% rise in the S&P 500. This appreciation includes the recent price gap-down for TAN as one of its largest holdings, First Solar (FSLR), disappointed on earnings. The plunge in price occurred on high volume, a red flag. But as shown in the chart above, the immediate trend line remains intact and the prior May-June highs of $26 further serve as support, so I remain bullish on TAN -- for now.

Another green-theme equity I've written about in the past is Tesla (TSLA). I first wrote about it on April 4th with the blog post entitled, "Tesla: Earnings, Smernings!" I discussed two bullish patterns in place for the stock and how a chart can often appear very compelling for companies that either haven't turned a profit (yet) or are believed to be destined for bankruptcy. TSLA stock was $42 then and has since risen 267% in that time compared to a 9% return for the S&P 500.

On May 30th, when the stock was around $105, I felt caution was in order and discussed trailing stop-loss precautions, with the first trigger set at around $94. The stock did in fact retreat from extended levels above $100, but never got below $94, meaning any stop-loss was avoided and the stock remained held. TSLA went on to appreciate another 50+%. With the stock recently gapping up on company news of a profit (!), trailing stop-loss precautions remain prudent, with the 10-day MA at $140 and 20-day MA at $130.

And it's not just solar stocks or Tesla that have been doing well. Another alternative energy / green area that has been soaring: wind energy. The chart below shows the FT Global Wind Energy ETF (FAN) versus the S&P 500. Wow, ride like the wind (Christopher Cross anyone?).

Source for all charts above:

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