Let’s stay on the subject of EV and other things “clean.”
Within the last week, we’ve seen a few Lithium stocks get downgraded by Wall Street, some solar stocks scramble for financing terms, and of course, the Ford news we just talked about.
It all adds up to a great “Walk Down Main Street” for the Clean Energy sector.
Looking back over the last five years, the only thing that has been a catalyst for higher prices in the Clean Energy space is government funds.
Whether it’s tax credits for solar panels on your roof and electric vehicles in your garage or funding companies to build infrastructure, the Government has been the largest catalyst for higher prices of Clean Energy stocks.
That’s the dirty truth.
Want proof? The passage of the Inflation Reduction Act in August 2022 marked the last time the Clean Energy ETF (ICLN) saw a 30% rally. Since then, it’s been in a serious bear market trend that’s about to get worse.
Follow that theory and Clean Energy has problems in 2024.
The current administration – staunch supporters of Clean Energy – is now focusing their political dollar in other areas of the market. Home ownership, eliminating student debt, and other funding projects to pander a wider group of voters are now at the top of the list.
In other words, the politician’s line-item budget for pandering to the clean energy crowd has been spent.
My technical breakdown of the sector shows that there are only a few stocks that aren’t in a technical bear market trend. Bear market trends in solar and other alternative energy sectors have become the weight around the neck of this drowning group and that trend is going to continue into 2024.
Bottom Line: The ICLN and Invesco Solar ETF (TAN) are both breaking below their bearish 50-day moving averages. Historically, we’ve seen an acceleration in selling when this happens. I don’t expect any deviation from history this time around.
About the Author
Chris Johnson is a highly regarded equity and options analyst who has spent much of his nearly 30-year market career designing and interpreting complex models to help investment firms transform millions of data points into impressive gains for clients.
At heart Chris is a quant – like the “rocket scientists” of investing – with a specialty in applying advanced mathematics like stochastic calculus, linear algebra, differential equations, and statistics to Wall Street’s data-rich environment.
He began building his proprietary models in 1998, analyzing about 2,000 records per day. Today, that database, which Chris designed and coded from scratch, analyzes a staggering 700,000 records per day. It’s the secret behind his track record.
Chris holds degrees in finance, statistics, and accounting. He worked as a licensed broker for 11 years before taking on the role of Director of Quantitative Analysis at a big-name equity and options research firm for eight years. He recently served as Director of Research of a Cleveland-based investment firm responsible for hundreds of millions in AUM. He is also the Founder/CIO of ETF Advisory Research Partners since 2007, noted for its groundbreaking work in Behavioral Valuation systems. Their research is widely read by leaders in the RIA business.
Chris is ranked in the top 99.3% of financial bloggers and top 98.6% of overall experts by TipRanks, the track record registry of financial analysts dating back to January 2009.
He is a frequent commentator on financial markets for CNBC, Fox, Bloomberg TV, and CBS Radio and has been featured in Barron’s, USA Today, Newsweek, and The Wall Street Journal, and numerous books.
Today, Chris is the editor of Night Trader and Penny Hawk. He also contributes to Money Morning as the Quant Analysis Specialist.
