The past week brought a swift correction to Greentech with the sector falling more than 16% from last Wednesday to Monday’s intraday low. General market fears and, to start the week, an SEC investigation of the Lucid Motors (LCID) SPAC merger all caused sympathy selloffs in our area. The swift change in sentiment was distinctly unpleasant – and stopped us out of two holdings – but the bears didn’t actually do any damage to the long-term support Greentech formed starting with the May bottom and, in fact, gave another point of buying support confirmation. That’s good.
The rebound Tuesday and Wednesday is also quite welcome, with a gap up Tuesday in the highest volume for Greentech in three weeks. In short, we have a mixed picture for investing right now, with the Greentech Timer showing the market below all the moving averages we watch, signaling bearishness. The index we watch, the Wilderhill Clean Energy, is around 81 today with 85-87 presenting itself as immediate resistance ahead, where various factors converge, including those moving averages and the fact trading volumes and prices since last December shows the area as a notable level to push through. Subsector-wise, water has pushed into bullish territory again, while solar and nuclear are also mixed. Wind remains bearish.
Real Money Portfolio
Aemetis (AMTX)
The renewable fuels maker came close to triggering our sell-stop in the recent action, closing just over 15 Friday (we prefer executing stops based on closing prices). We’ve rebounded into the 17 area and are up about 17% on our position. No news to go on, though the company did switch its state of incorporation from Nevada to Delaware, which is slightly more favorable to businesses. Our sell-stop is “under 15.” We’re switching our rating from BUY to HOLD based on the state of the Timer. HOLD
Aptiv (APTV)
APTV never really tested the 200-day moving average or our sell-stop in the low 150s. No news for the auto electrical systems supplier, which benefits from EV expansion. Shares are battling resistance today at 169. Our initial sell-stop is “near 151.” HOLD
Archaea Energy (LFG)
We recommended buying the renewable gas producer with last week’s December 1 SX Greentech Advisor issue. The portfolio added shares at 18.27, the average of the high-low of Thursday. Shares rebounded quickly from the growth stock selloff last week and are now looking to firm up over support levels at a recent 19.80. With market volatility we’re going to set our sell-stop at “under 16,” below the 20-day moving average currently at 16.23. BUY
Array Technologies (ARRY)
We sold Array with a special bulletin Thursday, after it broke our sell-stop on the close Wednesday. The technical damage likely presents ARRY strong headwinds for a time, given the bullishness of the sector coincided with the breakout of the stock over multiple layers of resistance. Now that it’s battling those resistance points again, the wise move is to honor the sell-stops, preserve capital and look for a better re-entry into the solar tracker maker later on. The portfolio booked a 30% loss, selling at 17.70, the mid-point of the high and low Thursday. Shares have recovered modestly from that level, but still face a lot of upward difficulty. SOLD
Aspen Aerogels (ASPN)
The maker of aerogels, a micro-lattice product used for EV battery system safety and insulation, continues to look very strong, and we’re up about 23% on our position. The sector selloff dipped it under the 40-day moving average, but it came back quickly. The all-time high of 63.66, set in November is resistance. There are some signs momentum and relative strength are flagging, which we will watch to see if its temporary noise from the recent dip, or something more significant. Our sell-stop is “under 48.” We’re keeping our rating based on the stock’s recent strong relative performance. BUY
Centrus Energy (LEU)
The uranium refiner triggered our “near 51” sell-stop with a close at 48.41 December 3. The portfolio sold at 49.68, the midpoint of Monday’s high-low. No special alert was issued for the sale and if you still hold, shares have improved and are working resistance at 59 today. Reset your sell stop to “below 48,” which has created a chart support that would be a notable break if violated. The portfolio previously sold half our position in mid-November at 68.70, a 105% profit on that portion. Overall, we gained 77% on the total position in just over two months. SOLD
Enphase Energy (ENPH)
The microinverter maker shed 55 points from its mid-November high to Monday. Shares have bounced a little, but are bearish. A close at 225 or higher would break some bearishness. We’re down about 2% from our buy price. Our sell-stop is loose, at “around 182” to stay in the long-term trade of U.S. solar demand. Given the Timer status and performance of shares, we’re switching our rating to HOLD from BUY based on the fact we wouldn’t initiate a fresh position in these conditions. HOLD
ESS Tech (GWH)
The medium-duration energy storage maker is a recently closed SPAC deal, so we have expected it to be volatile. It’s settling around 14 this week and didn’t see exceptional down volume (to the point it concerns us) in the market selloff. As we have noted with other SPACs, we like to see mainstream Wall Street coverage, as a sign the business story is getting out there, and Oppenheimer recently initiated coverage with a 28 price target (for what that’s worth). Shares are in a downtrend right now, so in the near term we want to see shares break that downline with a close at 15.25 or higher. Our sell-stop is “near 11” as an acknowledgement of SPAC-related volatilty. We’re keeping our rating with the caveat this is a higher-risk trade. BUY
KraneShares China Green Energy (KGRN)
The mostly China-listed Greentech stock fund continues to be rangebound. We’re inclined to buy closer to the 200-day moving average, which is around 45. Shares face a ceiling of 49-50, which means we want to have some upside if trading continues to be in a range. WATCH
Onsemi (ON)
The chip maker continues to look very good and we’re up about 45% on the position. Little news this week. Support is at 61, 55 and 50. There’s no pent-up selling, with shares just off all-time highs. Price internals shows a previously overbought condition has eased. Our sell-stop remains “under 50” (avoid a sell-stop right on this price). BUY
Wolfspeed (WOLF)
We’re slightly underwater on the chipmaker, but shares are bouncing back well, now back over their 40-day moving average. Other market pundits say Wolfspeed dropped last week on concerns over its EV role. There’s no evidence for that; in our opinion it more certainly was market risk-off action. Our sell-stop is “under 107.” The weekly and monthly charts look pretty positive, so we’re keeping our rating unchanged. BUY
Excelsior Portfolio
European Sustainable Growth SPAC / ADS-Tec Energy (EUSGW)
The merger between the SPAC and ADS-Tec Energy will go into effect December 21, taking some risk off the table here. The new tickers will be ADSE for shares, ADSEW for our warrants. The warrants really got clipped this week, falling nearly 50% to 1.07 on Monday. Timing suggests it was EV sector-wide worries over the Lucid Motors investigation. SEC investigations of SPACs center on one of two things: sales projections, of which Lucid had some quite aggressive ones, and/or who discussed what when. In the latter case, the regulatory body doesn’t want SPACs to be deals that should have been IPOs. The benefit of a SPAC’s looser regulatory requirements is that the SPAC can be truly a blank check, with no identified business target before its IPO. It’s possible that is Lucid’s issue as well. We have seen no reason to worry about EUSG and ASDS-Tec Energy. Warrants are at our original buy price, 1.66, Wednesday. BUY
Li-Cycle (LICY.WS)
Warrants are at 3.44 today, up 42% from our buy price. Debbie Simpson will be the new Li-Cycle CFO, taking over starting February for the planned retirement of the current financial officer. She previously was CFO of Maple Leaf Foods, a Toronto-traded food business. Li-Cycle has the option to initiate a cashless redemption if shares trade at $10 or greater for 20 of 30 days, which shares have. For that reason, we don’t recommend buying the warrants any longer. HOLD
Navitas Semiconductor (NVTSW)
Navitas warrants continue to trade above what we judge as their maximum value (of 6.50, the difference between the company right to redeem warrants at the share price of 18 and the warrant base exercise price of 11.50). At 6.70 midday Wednesday, they’re up 161% from our buy price. There are redemption clauses executable now by the company, so we no longer recommend buying the Navitas warrants. We sold three-quarters of the position in mid-November at 6.68, booking 160% profit on that portion. Warrants have been pushing over 7 regularly, so planning to sell the rest over that mark is a fine strategy. We’re holding the balance for a possible, more dramatic spike higher. HOLD.
Origin Materials (ORGNW)
We’re down 32% on warrants right now, trading at 1.65. But it’s normal, volatile SPAC warrant action. Origin does not have a warrant redemption clause for when shares trading above 10 for a period of time, unlike our other holdings. HOLD
Ree Automotive (REEAW)
Ree continues to be the worst performer of our early summer SPAC basket buy (the others being all the other companies in Excelsior except ADS-Tec). It is possible the EV chassis maker could face regulatory scrutiny on projections, given the business has yet to sell any chassis but has projected strong sales years into the future. It would be in management’s – and warrant holders’ – best interest to execute on their plan. We have more than four years of exercisable warrant time for this position to pay off. HOLD
ReNew Energy Global (RNWWW)
ReNew has been weaker of late over sluggishness in India’s renewable energy market. Still, we’re up about 20 cents, or 17%, on warrants. News-wise, ReNew’s operations were certified as carbon neutral across India. Brokerage Goldman Sachs, which owns a large stake in ReNew, also started coverage on the stock as a “buy.” BUY
Volta Inc (VLTA.WS)
We’re up 18% on the warrants, with them trading recently at 2.60. Volta opened sales offices in Berlin and Paris to head its expansion into the E.U. markets of Germany, France, Austria and Switzerland. Volta now has the option to redeem warrants when shares trade at 10 or higher for 20 out of 30 days. For that reason, we’re no longer recommend buying the warrants. HOLD
Thank you for being a subscriber. Our next SX Greentech Advisor issue is published Wednesday, December 14. We will send a special bulletin with any interim recommendations. Contact me anytime with questions or comments at brendan@cabot.net