The Alternative energy space has been very volatile. Surging up a couple hundred percent then back fifty percent. It all adds up to capturing profits and trying to buy back in near the lows.
A few names that have been roiled recently that are starting to look like setups again are the wind and solar companies. Either suppliers into the utilities or the actual utilities.
One example I like is Brookfield Renewable Partners. This chart has two important things to be aware of, but if it can complete the turn, it should have nice ‘power’ to the upside.
- The first is the SCTR is at the lowest level on the chart. That doesn’t mean it can’t bounce back up, but many times when stocks start to underperform, institutions might just sell into the rally.
- The sudden drop in momentum shown by the PPO is concerning. As the PPO indicator tries to turn back up, we want to be very aware of the potential for it to lose momentum again and make another quick move down.
We saw the sudden move down in 2020, but a whack of stimulus around the world unleashed a big rally. I prefer gradual pullbacks, not sudden drops on my PPO. I still like the setup as the full sto turns up.
Innergex is a Canadian listed stock with a similarly nice setup. We have a buy signal on the full stochastic. The same concerns exist with the fast drop and the weak SCTR, but we won’t know the outcome until long after the trade plays out. I still like it here.
Another listing is Boralex. We can see the same dynamic setting up in all of these charts.
I like it when the whole group starts to turn higher. At least there is some support from investors across the range of names.
Good trading,
Greg Schnell, CMT, MFTA