TAKE ADVANTAGE OF ALTERNATIVE ENERGY PLAYS
The boom in alternative energy stocks has given rise to a boon in alternative energy ETFs. More than a half-dozen funds launched in the past few years, and more are on the way.
The newest wrinkle is funds that focus on specific technologies. Today’s Company Invest pick is “TAN,” an ETF that provides access to the solar energy market. This fund offers exposure to the global solar energy market and a very inexpensive expense ratio of 0.65%.
We are always looking for pullback stocks to buy at Company Invest and TAN has experienced quite a correction here recently. It is always better to buy stocks or ETFs when they are on sale, instead of grabbing them at the top of rallies.
IS “TAN” A BUY? COMPANY INVEST TECHNICAL TAKE
The chart looks very favorable for a winning trade, or even a longer term investment right now in TAN.
“A” is the 7-day Relative Strength Index (RSI), a measure of a stock or ETF’s strength against its recent pricing. The RSI is giving two buy signals: One it is sitting in oversold territory (20.88) that it hasn’t been in since the end of August. The last time the RSI was this low, TAN gained 36%! Also, the current RSI has a bullish divergence (higher low), while at the same time the price is making lower lows. This is a powerful foreshadowing of a reversal.
“B” is the candlestick pricing chart of TAN. It has corrected from $9 to the $7 range and a higher low (compared to the August low) looks to be setting up. Today’s candlestick was a spinning top, which indicates indecision, and more importantly the selling occurred on very light volume.
“C” is the recent selling bars as TAN corrected. Look at the massive selling peak that took place last week with those huge red selling bars. Now contrast that with this week’s selling volume. This tells us the selling may be over.
“D” is the MACD histogram, a wonderful predictor of momentum change. There is a bullish divergence between the histogram bars and the price. If TAN can get over $7.50 it will be extremely bullish, as that would confirm the histogram’s directional change.
“E” is the slow stochastic momentum indicator. Yet another bullish divergence is setting up here.
Company Invest Bottom Line: Grab 100 shares here and put a stop at $6.77. That way if TAN breaks the August lows, you are safely out.
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