Is Solar Rising From the Ashes Again?

Recently, the Solar Energy sector has popped up on our watch-list of potential sectors to pay attention to. Over the past few weeks, the Solar Energy sector has been under some pricing pressure and has retraced nearly 50% of the previous trend across the sector. We, the research team at Technical Traders Ltd. understand the Trade War and uncertainty resulting from geopolitical tensions can sometimes create opportunities in the markets for all traders/investors. We just have to be smart enough to find them end execute them efficiently.

Is Solar Energy the next big trend to hit in the Energy sector? What is the potential for these stocks to move 10%, 20% or even 30%+ higher? Let’s take a look.

This first chart, a Weekly chart of First Solar (FSLR) presents us with an interesting price setup. After a dramatic price decline in May and June of 2018, the price decline abruptly halted near $52.00. In fact, this downside move ended almost as if prices “legged down” to the last known true support level. Historically, looking all the way back to the lows of 2012, this downside move represents just a little over a 38.2% retracement from the highs and coincides almost perfectly with a 50% retracement from the lows in 2017. These two numbers interest us because they show us that $53.50~55.00 is very likely a strong support level that is currently being tested.

Simple Fibonacci expansion analysis tells us any upside potential could target $61.35 (+12.65%), 69.95 (+28.44%) & 76.20 (+39.99%). These levels don’t take into consideration the potential for new breakout highs above $82.50. If this were to happen, we could see a +50% or more price upside happen.

Before we get too far ahead of ourselves, what would cause the Solar sector to begin a price advance at this stage in the economy? Renewed interest in the new technology of new infrastructure/government contracts? Replacing older technology with newer, higher performance, technology? Renewed interest from personal and corporate clients? What could cause this move?

You may remember that we’ve been suggesting that capital, cash, is always attempting to find solid sources of growth and opportunity while avoiding risk and depreciation. We’ve been suggesting that the spare cash on the planet has been rushing into the US stock markets by the boatload to take advantage of the strong dollar and the strong US stock market values. Could it be time for that capital to shift away from the FANGs and other leaders and move back into opportunistic equities that are somewhat off the radar?

Earnings for these companies for Q3 are set to be announced near October 28, 2018. With FSLR, the Q3 earnings have typically been fairly strong. One could attempt to assume Q3 2018 sales value may surprise the markets again and this could be a good time to consider the Solar Sector as an opportunity.

Our next chart is a Weekly ETF chart of INVESCO SOLAR (TAN). This chart presents a similar picture as the previous chart – a relatively strong pullback from April~June of 2018. The price pullback ends near a 50% Fibonacci retracement level and coincides quite nicely with our Tesla Vibrational Price Arc. We’ve drawn an arrow on the chart that suggests where we believe prices could be headed as long at this $21.75 support level holds.

Again, it does not take a genius to understand that any price advance from the $22.70 level to above $26.00 (or higher) would represent an almost +15% move. Any move above $28.00 from current levels would represent a +23.34% move. There is room for profits if our analysis is correct.

Lastly, we want to highlight what might be the most interesting setup in the Solar sector so far – Canadian Solar Inc (CSIQ). This Monthly chart attempt to show our readers exactly what has been transpiring in the Solar Sector for the past 5+ years. After peaking in early 2014, Solar technology lost its sparkle with investors. Slowly, over time, prices waned and dropped while attempting to find support. Technically, we view that support as the lows established in 2016 (prior to and near the US Presidential elections).

After that point it time, it is pretty clear to see that some renewed interest in the Solar Sector began to take place. Slowly, price advanced from the low as volume stayed somewhat muted. New rotational highs were established while the most recent low is still testing the 2016 lows. This tells us that the price trend, at least until we see a new breakdown low, is attempting to move higher.

CSIQ is currently trading near $14.75 and has upside potential above $21.00 on a breakout move. We are not saying this is definitely going to happen, but we do believe the Solar sector is setting up for an upside move and we do believe the potential for a new rotational high price to be established is quite strong. This means, finding the proper entry point and understanding the downside risk of these trades is critical.

Once CSIQ breaks our Red downward price sloping line, we would assume the price channel has been broken and we would expect the price to begin to rise dramatically.

As a member of our subscription services, you will be alerted to these, and other triggers, as our research team identifies them for the best chances at future success.

Please take a minute to visit The Technical Traders to learn how we can help you find new opportunities in the markets and stay ahead of these trends. Our most recent trade in UDOW returned 12.6% for our members last week. Please take a few minutes to understand how a small, dedicated, team of researchers with 53+ years of experience can make a difference in your future.

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The Madness of the EU’s Energy Policy

By Marin Katusa, Chief Energy Investment Strategist

The stakes couldn’t be higher. Vladimir Putin has launched a devastating plan to turn Russia into an energy powerhouse. And Europe, dependent on Russian natural gas and oil for a third of its fuel needs, has fallen right into his hands: Putin can bend the EU to his will simply by twisting the valve shut.

Considering how precarious Europe’s economic security is, one would have thought that now would be a good time for the EU to reassess its energy policy and address the effect crippling energy costs are having on its struggling economy. But the EU is never going to agree to a rational reappraisal of its policies, because eco-loons like its new energy commissioner, Violetta Bulc, have taken over the asylum.

A practicing fire walker and a shaman, she’s the sort of airy fairy Goddard College type who only believes in the power of “positive energy.” What will guide us in this frightening new era is, according to her blog, the spirit of the White Lions:

The Legend says that White Lions are star beings, uniting star energy within earth form of Lions. The native ancestors were convinced that they are children of the Sun God, thus embodying Solar Logos and legends say that they came down to Earth to help save humanity at a time of crisis. There is no doubt that this time is right now.

With the European Commission stuffed with green anti capitalist zealots, it’s not surprising that the EU’s response to the challenges of a resurgent Russia is a complete break with reality.

The EU has come up with an aggressive climate plan—just like Obama’s. In defiance of all logic—if not Putin—it’s agreed to cut greenhouse gas emissions by 40% and make clean energy, like wind and solar, 27% of overall energy use by 2030. Instead of guaranteeing the “survival of mankind,” this would cause the extinction of Europe’s industry—unless there’s a secret plan to massively expand nuclear power.

Fortunately for Europe, its leaders haven’t yet lost all their marbles.

These climate goals are just a bargaining chip in the runup to next year’s UN climate summit in Paris. They’re not legally binding. Unless the whole world commits to an equally radical policy of deindustrialization—which seems rather unlikely to say the least—the EU will “review” its climate targets.

This is just as well. In trying to meet the so-called 20:20 target—a 20% reduction in emissions by 2020—Germany and the UK have already discovered that renewable energy is too costly to maintain a competitive industry. As electricity prices skyrocket, Germany’s industrial giants are either having their power costs subsidized or are relocating to the US.

Both countries are struggling with the inability of wind and solar energy to provide reliable baseload power, which is threatening to cause blackouts.

The UK is putting its faith in fracking—and has managed to head off any EU legislation to ban shale-gas. But Germany and its fellow travelers, who have no qualms about reverting to coal, are simply overriding the EU Commission and its zero emissions utopia.

Knowing that EU climate policy would destroy international competitiveness and crush their economies, Poland, which depends on coal for 90% of its energy needs, and other low-income countries have taken a different approach. They've forced the Commission to give them special exemptions from any emissions reduction plan.

Unlike in the U.S.—where Obama is taking executive action to wipe out the coal industry—lignite, or brown coal, is set to become an increasingly important part of Europe’s energy supply, as it is in much of the rest of the world. There are 19 new lignite power stations in various stages of approval and construction in Bulgaria, Czech Republic, Greece, Germany, Poland, Romania, and Slovenia. When completed, these will emit nearly as much CO₂ as the UK.

Which is ironic. The UK is the only member of the EU to have been insane enough to impose a legally binding carbon dioxide reduction target intended to take it to 80 percent of 1990 levels by 2050. It’s also the only modern industrial nation where there’s serious talk of World War II style energy rationing.

As you’ll discover in my new book, The Colder War, Europe and America need to wake up. They’ve never been so economically vulnerable. The time for indulging environmental fantasies and putting one’s faith in White Lions is over—unless, that is, you want to see Putin controlling the world.

Click here to get your copy of my new book. Inside, you’ll discover exactly how Putin is orchestrating a takeover of the global energy trade, what it means for the future of America, and how it will directly affect you and your personal savings.

The article The Madness of the EU’s Energy Policy was originally published at casey research

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Thomas Edison’s Dream Smashed

By Adam J. Crawford, Analyst

The incandescent light bulb was invented in the very early 1800s, but at that time was a device too crude and impractical for mass adoption. Over the next 80 years, at least 20 inventors contributed to its improvement, until, in 1880, Thomas Edison developed and patented a bulb that would last a miraculous 1,200 hours. Edison’s product was the first to offer the levels of functionality, durability, and affordability necessary for widespread commercial appeal. That’s why he gets credit for inventing the light bulb, even though he was decades late to the party.


Some 130 years after Edison’s patent was approved, the incandescent light bulb has basically the same features… a filament inside a glass bulb with a screw base. And for all those years, it’s been doing yeoman-like work providing clean, quality lighting (compared to the candles and oil lanterns of the 19^th century), in millions of homes and offices. Today, however, the incandescent light bulb is on its way out… and a multibillion-dollar industry will be forever changed.

Done In by Inefficiency

The incandescent bulb, though very effective, is notoriously inefficient. To understand why, one need only understand how it produces light. The filament (or wire) inside a bulb is heated by an electric current until it becomes so hot it glows.

The problem: only about 10% of the energy used by an incandescent bulb is converted into light; the rest is dissipated as usually unwanted heat.

This is a problem, not just for the homes and businesses using these bulbs, but also upstream at the power plants that produce the required energy. In an era when producers are wondering how they’re going to keep up with the surging demand amidst rising fuel costs and concern about the environmental impact of energy production is running high, such inefficiencies are frowned on.

Governments, of course, have the ability to put muscle behind their frowns… and they’re doing just that. In 2013, it became illegal in the United States to manufacture or import 75 and 100 watt incandescent bulbs. 40 and 60 watt bulbs were added to the ban in January of this year. The U.S. isn’t the only government actively limiting the use of incandescent bulbs. The European Union, Canada, Brazil, Australia, and even China are among many that have phase out programs aimed at forcing users to convert to an alternative technology.

For household applications, that primarily means a switch to those twisty shaped compact fluorescent lamps (CFLs), or the newest competition in town, light emitting diodes (LEDs).

A CFL’s spiral tube contains argon and mercury vapors, and they are far more efficient than the old Edison bulb. When an electrical current is passed through the vapors, invisible ultraviolet light is produced. The ultraviolet light is transformed into visible light when it strikes a fluorescent coating on the inside of the tube.. all at about one fourth the electrical cost for an equivalent amount of light from an incandescent lamp.

LEDs, in contrast, don’t use commonplace materials. Rather, they’re made from somewhat exotic semiconductor materials, like indium and gallium nitride. When an electrical current is passed through these semiconductors, energy is released in the form of particles called photons—the most basic units of light in physics, i.e., light’s equivalent of individual electrons. In the process, little is lost to heat and the materials take minimal wear, making for another very efficient light source, and one that lasts far longer than its competitors.

Comparing the Alternatives

Right now, LED bulbs are relatively expensive to produce. That’s because a bulb is not just a bulb when it comes to LEDs—it can’t be made brighter by just putting in a thicker filament or tube. Instead, each bulb is a complex web of up to dozens of small diodes, each roughly the size of a pinhead, wired together and to a ballast that regulates the electricity flowing through them.

When compared head to head with incandescent and CFL light bulbs, LEDs come out the clear winner in operating costs. But even with millions of these bulbs now shipping to Home Depot, they still fall down on initial cost:

60-WATT Equivalent	Incandescent	CFL	LED
Lumen	880	800	800
Life (hours)	1,000	8,000	25,000
Initial cost	$1.19	$5.00	$9.98
Yearly operating cost	$7.23	$1.81	$1.45

However, when you add up those advantages over that 25,000 hour lifetime, then the advantages start to become clear:

60-WATT Equivalent	Incandescent	CFL	LED
Yearly operating cost	$7.23	$1.81	$1.45
Years	23	23	23
23-year operating cost	$166.29	$41.63	$33.35
Initial cost	$1.19	$5.00	$10.00
Replacement cost	$28.56	$10.00	$0.00
Total cost	$196.04	$56.63	$43.35

As you can see, to produce roughly the same lumens (a measure of the amount of visible light emitted by a source), both CFLs and LEDs are hands-down more economical than incandescent bulbs.

Of course, in a residential scenario where a bulb is run for maybe three hours a day, it would take about 23 years to realize that big a savings. But put them in place in a commercial or industrial setting like the hundreds of lights running 24 hours a day in the local Walmart, and the savings add up quickly.

Still, why are we so bullish on the prospects for LEDs if they barely edge out their CFL competitors over tens of thousands of hours?

The first difference is environmental. CFLs have the inherent disadvantage of containing mercury, a toxic metal that poses health and environmental risks. Break one of these bulbs and you have a biohazard on your hands. There’s a real cost to recycling these bulbs and containing the mess from those that are just tossed in the trash heap. It’s a cost that will certainly be shifted back to consumers of the bulbs if environmental legislation continues on its same path.

Further still, over its life, an LED bulb is already 25% more economical than a CFL. When compared to an incandescent bulb, either is a huge cost winner. But when it comes down to dollars and cents, the LED wins today. The only reason not go that route is the big upfront cost difference, which when buying tens of thousands of bulbs at a time (as many commercial companies do) can be a hard pill to swallow.

However, the cost of LEDs has been falling fast in recent years and will continue to do so. In 2011, a 60 watt equivalent LED bulb retailed for about $40. In 2012, the price fell below $20. Today, it’s less than $10.

As volumes increase and competition among manufacturers and retailers intensifies, prices will continue to fall. Some industry analysts see a $5 LED on the near horizon. We wouldn’t bet against it.

The price could go even lower if manufacturers can successfully implement a cost-reduction break through. Specifically, LED devices are built on expensive aluminum oxide substrates. But manufacturers are working on ways to build on substrates made of silicon, which would substantially reduce defects and thus costs. As prices drop, and if environmental law hits mercury laced CFLs next, LED’s cost advantage will start to widen significantly.

Inflection Point

This all means that the LED’s time has arrived. According to IHS, a global market and economic research firm, unit shipments of LED lighting devices will grow at a compounded annual rate of 40% between now and 2020.

In 2011, the size of the global lighting market was about $96 billion, and LED devices accounted for about 12% of that amount. By 2020, McKinsey & Company projects, the size of the market will be $136 billion, of which 63% will be attributable to LEDs.

With the LED bulb, we have a trend that’s been in the making for several years… and it’s now ready to surge. How should an investor play it? Certainly not with a blindfold and a dartboard, or a whole sector buy like an ETF, because not all participants in this market will prosper.

Some will not be a pure enough play to benefit, or will be cannibalizing their own incandescent and CFL business… like GE and Phillips. Others will find themselves producing a commodity with ever thinning margins… like Cree. And others still already have much of the anticipated growth priced into their shares.
However, we scanned the field and found a company that is well positioned to benefit from the growth of the LED market while, at the same time, actually improving its margins.

We believe this company’s stock is undervalued. That’s why we’re recommending it in the next issue of BIG TECH

For access to this recommendation and many more, simply sign up for a risk free trial of BIG TECH. 

If you decide to keep your subscription, it will only cost a mere $99, nothing compared to the profits just this one investment should bring. But, if for any reason you’re unsatisfied, simply cancel to receive a prompt, courteous, and complete refund of the entire subscription price. You have 3 full months to make up your mind.

The article Thomas Edison’s Dream Smashed was originally published at Casey Research

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