The broad market making new highs this week gives us a bullish framework to work within. For the sectors that comprise most of Greentech – technology, materials, industrials and utilities – it’s a mixed bag, however. Tech and especially utilities have good momentum, while industrials and materials are weak but showing improvement of late. Only the energy sector – which in the broad market consists mostly of fossil fuel businesses – looks decidedly poor, from a momentum and relative strength view. The Greentech sector itself has had a good three-day recovery, bouncing after hitting support last week, but the current conditions are mostly bearish. Our benchmark index is below its 20- and 40-day moving averages, just overhead, with the 200-day a good bit away at 20% higher from here. We remain in a medium-term downtrend that started in mid-February. But as we’ve noted before, the intensity of the downtrend is lessening and we may already be in a trading range, building a base for an eventual return higher. With Greentech, EVs, wind and solar remain weak, but water stocks are bullish, which is good for our water ETF. The net result is we need to remain cautious but the strength of the overall market lets us know we can take positions on stocks that look technically strong. For that reason, we’re culling our Watch list of stocks that will take some time to flash a buy signal. Last week we dropped utility-scale battery provider Stem (STEM). This week, below, we drop General Motors (GM). Real Money Portfolio Aemetis (AMTX) The bio-fuels company has been testing a support range between 7 and 9. Shares rallied yesterday on a bullish analyst report. That got shares above the 20- and 40-day moving averages, but there is still resistance overhead into the mid-10 range. WATCH Ameresco (AMRC) AMRC continues to struggle to break its ceiling at 67-69. Higher lows suggest it should be about to break out to the upside, but until it does it also looks a lot like a stock stuck in a 10-point range. WATCH Aptiv (APTV) Aptiv tested support last week and recovered a bit this week. We’re now below the 40-day moving average, which is acting as resistance. Taking a step back and looking at the weekly chart, APTV shows positive movement. We’re going to loosen our sell-stop here from ‘near 153’ to ‘around 147’ to allow for more natural volatility. It’s a spot long-term support should come in at as well. We’re looking for a close at 160 or higher to get shares looking more bullish again. BUY Chipotle Mexican Grill (CMG) CMG looks great, with little selling pressure and consolidating action at the highs. We’re up about 10% now. We’re raising our sell-stop again this week, to “around 1,790” from “near 1,777.” The 1,800 level looks like good support, but we need to be wary of setting stops at round numbers because that’s where lots of traders set stops, often creating some false signals. Our expectation is there is still a good bit of upside to shares here. BUY First Trust Water ETF (FIW) After a dip into near-term support the back half of last week, our water ETF is looking fine again, around break-even from our entry point. We’re keeping our sell-stop “near 85.50” which would be a notable violation of the 40-day moving average. BUY General Motors (GM) We wanted to see shares holding around support at 53 last week and we didn’t get it, with the automaker in the high 40s now. Buyers came in in good volume, which gives shares the look of having bottomed, but there’s a good bit of resistance built into shares now. A death cross – where the mid-term moving average (the 40-day for us) crosses and moves below the 200-day moving average – is imminent. That tells us there’s going to be headwinds for shares for a bit. It may not take GM long to work through the technical issues (related in part to the Bolt battery recall that, so far, seems to be the fault of LG, the provider), but this could combine with worries over automaker chip supplies (Toyota recently announced very large production cutbacks due to it). We can come back as shares look primed for an entry. For now, we’re going to drop GM from our watch list. DROP KraneShares China Clean Tech ETF (KGRN) We bought into the China-focused ETF last week at 44.92, the mid-point of trading last Wednesday. Shares bounced off support last week and are fighting resistance at these prices. We set our stop loss at “around 42” and we’re sticking with it there. A push above 49.50 is the next target we want to see taken, which would open shares up to a strong run higher. BUY ON Semiconductor (ON) ON found support at 41, inside the gap (or rising window, for candlestick charting enthusiasts) that was 39-42. Price action looks like the semiconductor maker is back on the uptrend. Our sell-stop remains “around 39-40,” a level that erases the support from the window. BUY Steel Dynamics (STLD) The environmentally friendlier American steelmaker is looking very good of late, encouraged by infrastructure expectations. We’re up more than 16% on our position here, and the question becomes how tightly we want to set our stops. Tighter, say at support at 67, locks in about a 10% gain, while looser, like our “near 63” stop right now, would mean we exit with only a couple of bucks profit. Our feeling, backed by charting projections, is that a move into the low to mid-80s is possible, but can a steelmaker extend much further than that? We’re going to shift our sell-stop a little higher, to “around 66.” HOLD Trex (TREX) Trex attempted a breakout of resistance yesterday but finished the day in the bottom third of the day’s range. That signals a little exhaustion from the bulls so we should be alert for a new move down, but that’s not guaranteed. Perhaps we’re too glass-half-empty in that assessment. The upside is Trex closed Tuesday at a new all-time high – hooray! That’s bullish. The price chart shows a firm uptrend, we’re not too extended above its moving averages so it’s reasonable to see a path to 130 here. We’re going to raise our sell-stop a bit higher to “near 101” (really below 101 is preferable) from “near 99.” HOLD Excelsior Portfolio Our rating remains BUY on each of our SPACs, preferably as a basket of even positions. We have no sell-stops. Li-Cycle (LICY warrant) Lithium recycler Li-Cycle is starting to get Wall Street analyst coverage, which is a positive for shares eventually getting some institutional buyer support. Right now, however, shares are in the high 8 area, slumping from the transition to public company after the SPAC merger closed, while our warrants have strengthened the past week by 30 cents, to 1.80. Navitas Semiconductor / Live Oak II SPAC (LOKB) Atlantic Bridge, a private equity investor that owns a stake in Navitas Semiconductor, has agreed to invest $10 million in the PIPE placement that is helping bring the semiconductor maker public in this SPAC deal. Live Oak also said Encompass Capital Advisors recently signed a redemption backstop agreement to buy up to 2 million shares before the companies complete their merger. That’s positive because SPACs see a lot of arbitrage trader selling as mergers come to a close. The companies extended their timeframe for closing a deal to September 17. That raises some concern there’s PIPE financing trouble, as the two announcements hint at. However, it’s in everyone’s interest that the deal get done, so we continue to expect it will. Our warrants are about 12 cents weaker this week, while shares are basically unchanged. Origin Materials (ORGN) The carbon negative plastics start-up saw some insider buying this past week – the co-CEO bought $500k of shares at 5.76, which puts him up about a buck already as shares are bouncing back. Similarly, the warrants have added 20 cents this week. Ree Automotive (REE) Ree won $17 million in funding from the U.K. government to facilitate commercialization of its REEcorner technology – the approach that puts a vehicle’s operational systems in the wheel wells to keep the chassis open. The company also saw brokerage BTIG start coverage with a 20 price target on shares. They’re under 9 now, suffering from typical SPAC merger closing weakness. Our warrants are doing fine at 1.26, which implies that shares should be at 12.76. ReNew Power (RNW) The RMG II SPAC closed the merger with ReNew, and the stock started trading Tuesday under the ticker RNW (it was RMGB), and our warrants under the ticker RNWWW. They’re both little changed on the week, with no other news. Volta Charging / Tortoise 2 SPAC (SNPR) Volta inked a “multi-year commitment” from Georgia utility Southern Co. to launch Volta’s PredictEV product, which will use data mining and AI to support infrastructure planning for EV charging networks. There’s no indication if it’s a revenue generating deal, but it’s welcome nonetheless. The SPAC merger vote is being held today. Thank you for being a subscriber. Contact me anytime with questions or comments at brendan@cabot.net. The next issue of SX Greentech Advisor is out Wednesday, September 1.
