Ratings Changes:
Daseke (DSKE) to SELL
Altus Power (AMPS/WS) to HOLD
It’s a bear market and there’s a lot of confusion among the various pundits about what’s next. As tempting as it may be to say we’ve hit bottom and are rebounding, it’s just too risky right now to say so. When things get confusing and sentiment swings too much one way or the other, I like to simplify my decision process. That doesn’t mean I ignore voices in the market; I simply make sure to look at what I know have been reliable indicators in the past.
For Greentech, I’m looking at where prices are relative to the 200-day moving average, my favorite gauge of long-term sentiment, as well as the 40-day average, which is quick enough to suggest a turnaround while filtering out near-term noise. Greentech, as represented by the Wilderhill Clean Energy ETF (PBW), is below both averages and they’re trending down – not great right now.
I also like to examine the price charts and see where natural lines of resistance and support are falling. At the moment, Greentech is in a steep downtrend, with a resistance line starting at the recent April 4 peak – prices are struggling against that line this week. There’s some hope that line will be broken – steep downtrends can’t be sustained for very long. But passed that is probably a more significant downtrend line starting from last November that provides a ceiling about 20% over where prices are today. That will be harder for Greentech to break and means we could see a short-term rally while remaining in a bear move. Eventually this will play itself out. In the meantime, we stay cautious and adhere to our stop-loss discipline. That means we should be selling Daseke (DSKE), which broke our stop-loss.
Here’s what’s happening with the rest of our stocks/warrants…
Real Money Portfolio
Clean Earth Acquisitions Corp. Shares, Warrants and Rights (CLIN, CLINW, CLINR)
Light volume and basically unchanged on all three securities of our cleantech SPAC. We’re profitable on this position as long we have patience. HOLD
Clearway Energy (CWEN/A)
France’s TotalEnergies, a legacy oil and gas company, is buying a 21% equity stake and half the controlling interest in Clearway from New York investment fund Global Infrastructure Partners for cash and a stake in residential solar installer SunPower (SPWR). Clearway doesn’t get any of the cash or equity but TotalEnergies will provide the right of first offer on U.S. land-based assets Clearway may want to sell and will also provide access to the company’s energy marketing services. The market likes it: Shares are up 4% today on the announcement and look like they may firm themselves on the bullish side of their 200-day average. Next resistance is at 34. Our sell-stop is ‘around 28.’ HOLD
Darling Ingredients (DAR)
Darling is choppy, holding over a support zone at 71-73. We didn’t get the test of resistance at 85 we thought may come last week. Our sell-stop is ‘below 62.’ HOLD
Daseke (DSKE)
I hate selling stocks that I know are being bid down only because of weakness in the market or its sector. That’s what’s happening with Daseke, a specialty trucker (of wind turbine arms and similar large, awkward things) that is falling on bearishness around trucking peers who have much more exposure to consumer-goods transport worries. Yet I look through the notebooks I keep on my trades and remind myself how many trades I held onto because of the same notion, and how many only got worse because the market was right and I was wrong, or I got tired of waiting to be right and sold for the tax loss. That’s a long-winded way of saying that because Daseke broke our stop-loss of ‘under 7.18’ this week, we need to stick to the plan and sell, preserving the capital we have. SELL
Good for Growth Shares, Warrants, Rights (GFGD, GFGDW, GFGDR)
Similar to our Clean Earth SPAC, our ESG SPAC is seeing light volume and no news as it hunts for a target. We can’t lose money on this trade if we’re patient, and have great exposure to the potential upside. HOLD
Natural Grocers by Vitamin Cottage (NGVC)
The organic grocery chain has weakened after very good earnings, it appears on future earnings concerns over the company’s commitment to try and shield its customers to some extent from inflation. Still, shares are pulling back to an area that could make for a good entry target, being a confluence of both long-term support and natural retracement of an earlier cup-with-handle formation. WATCH
Excelsior Portfolio
ADS-Tec Energy (ADSEW)
Very little volume in the warrants this week, and we’re a little lower. No news, but we are seeing signs long-term investors are buying the fast-EV charger company, with Invesco disclosing 2.4 million shares. HOLD
Altus Power (AMPS/WS)
With last week’s issue we said buy warrants of the renewable energy provider to commercial and industrial properties. Warrants moved away from us a bit between the issue and when we could buy, so instead of adding at less than 1 per share as we’d hoped, the portfolio added warrants Thursday at 1.05, the midpoint of the high and low Thursday. The trade still works, it will just change our calculus a little down the line. In any case, our warrants have perked up nicely since then, at a recent 1.32. Given market conditions around low trading volume for SPAC warrants generally and the price advance, we’re going to shift our recommendation to Hold, from Buy. HOLD
Constellation Energy (CEG)
The nuclear energy generator is maintaining its uptrend line even in the choppy market. Shares are at 58 today; we’d like to see them get over 60 to have a clearer path to work higher. HOLD
ESS Technology (GWH.WS)
The warrants of the iron-salt energy storage maker were a ‘Watch’ in last week’s issue because we wanted to be able to enter at a price below 1. Warrants have clipped down a good bit, to 68 cents today. There’s no obvious news, but ESS shares have fallen after a failed test of resistance in the 5 area. That has sent warrants down too. We may be able to enter at a better price for the warrants, which would greatly increase the reward potential of the trade. We have some time with ESS, since management does need to show Wall Street it can book revenue from shipped systems. WATCH
FuelCell Energy (FCEL)
If you laid FuelCell’s recent chart over Greentech at large they’d appear basically the same. At a recent price of 3.59, they’re still in a downtrend, but off the recent lows by a good bit. This is a long-term, half-sized position. Earnings will be announced on June 9. HOLD
Origin Materials (ORGNW)
Origin is starting to build an encouraging chart, with some base forming for the shares in the 6 area, and moving averages starting to turn upward. The warrants are a little better than last week, at 1.38 recently. HOLD
Ree Automotive (REEAW)
Ree warrants and shares are weak, but there is hope as long as the company can weather the bear market and continue making progress toward production beginning in 2023. HOLD
ReNew Energy Global (RNWWW)
ReNew appears to be building a floor for shares in the 6 area. Warrants are a little stronger this week, at 1.33 recently. HOLD
Volta Inc (VLTA.WS)
The EV charger company had no news this past week. Shares and warrants continue to be weak, though haven’t changed much over the week. HOLD.
Thank you for being a subscriber. Our next SX Greentech Advisor issue is published Wednesday, June 1. Get in touch with comments, suggestions and questions any time. Reach me at brendan@cabotwealth.com.