May 3rd, 2009

Stocks in Alternative Energy Industry Groups: Solar and Coal

Last weekend it was the Steel-Producers Industry Group and this week it’s the Energy-Other Industry Group that appear likely to present some excellent opportunities over the near term. The Energy Other Group includes companies not in the Oil & Gas energy complex (development, refining, services, delivery). Rather, these firms are involved alternative energy sources in coal, solar, wind and geothermal.

If you had bought last week’s Steel Producers you would have had to wait until Friday to see any signficant moves. While AKS lead the five appreciating 14% during the week, MT and MTL both saw prices lower at week’s end than the beginning. But both MT and MTL made up with 8.5% and 16.7% on Friday alone. While all this was happening, the Steel-Producers Industry Group actually dropped in Rank from 53 to 90.

The reason I’m reporting at length on last weeks group is to underscore that Industry Group ranking indicates only relative ranking and these rankings can change as big money flows rotate among the industry groups that are aiming to be future leaders. There are only 197 Groups so if more money flows during a week to other groups, then they will move to the top forcing other groups to drop in rank. That may be what happened to Steel so that’s why I also include a 20-week moving average of those rankings to smooth out the week to week fluctuations. The reversal patterns in these charts weren’t violated and the stocks still look primed to breakout (as AKS did).

Industry Group doesn’t replace the need to look at individual stock charts for breakouts and momentum. Having said that, here’s a chart of the Energy-Other Industry Group Ranking:

You should see an uncanny similarity to last week’s Steel Producers chart since stocks in both Industry Groups have tended to move in tandem. PCX (Patriot Coal) is a member of this group and played a starring role on StockTwits this week increasing a spectacular 49.7% for the week.

Most of the individual stocks in this group show promise due to what clearly looks like reversal patterns. Additionally, they all have a high Volatility rating which is important in this late stage of the Market’s Accumulation Phase and possible early stages of a new Mark-up Phase. Because of the large number, I’m displaying only a few; the others are available by clicking on the symbol:

  • Solar: Here are four with similar patterns but most of the solar stocks look appealing.
    • STP (Suntech Power)
    • CSIQ (Canadian Solar)
    • TSL(Trina Solar) [full disclosure, I hold a position here]
    • FSLR (First Solar)
  • Miscellaneous
    • GU (Gushan Environmental)
    • YGE (Yingli Green Energy)
    • ANR (Alpha Natural Resources)
    • CLNE (Clean Energy) [full disclosure, I hold a position here]
  • Coal
    • YZC (Yanzhou Coal)
    • JRCC (James River Coal)
    • BTU (Peabody Coal)
    • CNX (Consol Energy)
    • ACI (Arch Coal)
    • FCL (Fondation Coal)

Remember, any commitments in these momentum stocks should be made only after a confirmed breakout and only within the context of a upward market trend.

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