“Our business is driven more by policy, environmental regulations which are mandating steel manufacturers to install these systems – THEY DON’T HAVE A CHOICE AND THE FINES FOR NOT COMPLYING ARE INCREASING

While this sounds nice several ratings agencies have labeled RINO a SELL.  Before stepping in we need to look at what is going on.  We can start by looking at past history to see if there is a pattern we can use for guidance.  By bringing up the 1 yr chart we can look for support and resistance points.  Over the past month we can see support at the $12 and $11 levels (the lower yellow lines). Previously in August it bounced off $11 support.  Looking back to September 8 we can see that support at $12 held and there was a price bounce.  In late September there was a large price move and the stock moved up at a rapid pace.  Looking at today’s pattern we can see similar behavior and a bull triangle forming.

Bull Put Spread

Buy Aug 10 10.00 Put @.32
Sell Aug 10 11.00 Put @ .50
Credit (Mid): 0.18
Amount at Risk: 0.83
Potential Return: 0.18
Potential % Return: 21%
Break Even: 10.83

Or if you are feeling more aggressive you can go for a combo.  The disadvantage is if the stock drops below $11 by August expiration you agree to buy it for $11 by selling the Put option, no matter how low it goes.  But after looking at the charts it seems unlikely that the stock will break down through support at $12 and at $11.

Combo Risk Reversal
Buy Aug 10 14.00 Call @1.05
Sell Aug 10 11.00 Put @ .45
Debit : 0.65
Amount at Risk: 0.65
Delta: 0.55
Potential % Return: Theoretically Unlimited.  85% (for $1 move up in underlying)

Or for something plain and boring you could buy the stock today for about $14 and ride it up to the next resistance point of $15.

RINO’s services are going to be in strong demand in China.  Until we see where the economy is going, this is something to trade in and out of, or limit your exposure through the use of options.

We’re seeing some positive technical signs:

• Higher highs and higher lows have been happening for four days.
• Person’s Proprietary System (PPS) is showing a buy
• PPS shows a positive cross over after the buy signal
• MACD Histogram progresses back to and above zero
• Stochastics have crossed over into positive and have not gone negative
• Stock did not break down below pivot point of $6.93

Our short term strategy was to do a covered call.  In simple terms you buy some stock and then sell a contract to sell the stock to someone else at a later date.  We managed to get in at $6.94 per share and sold a March 7.5 CALL for $.40.  We get paid $.40 per share for agreeing to sell the stock to someone else if it reaches $7.50 by March 19.  If the stock keeps going up we miss out because we will have to sell it at $7.50.

There’s a 63% chance that it will not get to $7.50 so we can put on another covered call next month if things go our way.

If it stays under $7.50 we get to keep the $.40 which reduces our risk to $6.54 per share.  We won’t lose any money unless the stock drops below $6.54.  There appears to be some resistance around $7.12, but if that breaks it should be a relatively smooth ride up to $7.50.  We have a Sell Stop in place at 6.74 which still nets us $.20 per share if the trade moves against us.

Without the covered call this trade might not be worth the risk.  Using covered calls can be a good strategy to reduce your risk if you know that you want out of a stock by a certain date or price.

YGE Day Chart

Yingli Green Energy is showing a positive crossover on the Stochastic,  the MACD is improving day after day,  and the PPS is also having a positive crossover.

OPTT Day Chart

Ocean Power Technologies is showing a positive crossover on the Stochastic,  the MACD is improving day after day,  and the PPS is leaning towards a positive crossover.

FSLR Day Chart

First Solar is is showing a positive crossover on the Stochastic. The MACD is improving day after day.  The PPS is also having a positive crossover and is signaling a buy indicator.

AONE Day Chart

Battery Maker A123 Systems is showing a positive crossover on the Stochastic.  The MACD is improving day after day after a flat decline.  The PPS is almost having a positive crossover and the buy indicator has triggered.

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Business and recreational travelers do not want to be stuck on a 300mph train when a Boeing 717 can go 600mph.  Most tickets on Airtran and Delta start at $49 each way.  To make the train reasonably priced, it would have to be in the $5-15 range each way.  Matthews also forgets that terrorists can blow up trains just as easily as planes.  This would mean putting the TSA in every train station, which would be expensive and inconvenient for the traveler. 

A much better investment than high speed rail would be to invest in slow rail for cargo.  Freight train is more efficient than moving goods by 18 wheeler to distribution hubs where the 18 wheelers can then pick up the cargo and deliver it to the final destination.  Trains are 2-4x more fuel efficient than trucks per ton-mile and emit 1/3 the NOx of trucks per ton-mile.  Cramer’s picks of US Steel and Caterpillar are right on target with slow trains, high speed trains, or roads for trucks, but we need something sustainable after the construction is over.

Another reason high speed commuter rail is not the solution is the use of technology to eliminate the need to commute.  GenX and GenY are more comfortable with running a virtual office.  Whether these groups are business owners or executives at established businesses, they will influence the workforce to become more decentralized.  Instead of meeting in person in a conference room, you can use GoToMeeting, WebEx, or the open source tool DimDim.  The last time we ordered a nifty IT appliance a Sales Engineer didn’t come out to set it up.  We placed the device in the server room with an IP address.  Then the Sales Engineer took control of  our PCs through WebEx Remote Support and did all of the configuration from California.  They could have sent a real person, but why do that when it’s more efficient and green to do work over the internet?  Skype and SIP based calling allow workers, vendors, and customers to communicate across the world for the same price as it would cost to call across town. In the near future there will be no reason to go to the office which is good for workers, good for the environment, and bad for high speed commuter rail.

Unfortunately it was the Democrats that indirectly torpedoed the extension.  According to Charles Grassley (R-Iowa), the Democrats tried to bring back the estate tax along with the tax credit for biodiesel producers.  They also decided to put it into a defense bill for some strange reason.  Something as divisive as the death tax was sure to not win support from the Republicans.  By taking this approach the Democrats have shown that they are not committed to green energy reform.  Since this would be a tax break for small business any Republican would be behind the bill if that were the only topic.  Democrats can show their commitment to renewable energy by creating a bill that brings back a minimum of $1/Gallon tax credit for biodiesel manufacturers.  This bill should carry out no other actions than the tax cut. 

Republicans want to see lower taxes and less dependence on foreign oil.  Democrats want to protect the environment and bring manufacturing jobs back to the US.  Passing the tax cut will benefit Democrats and Republicans.  It’s time to drop the red state/blue state partisan bickering and get to a green state.  Write your Democrat Congressman and Senators and tell them to support renewable energy in a way that brings the Republicans to the cause.

the CEO stated in an SEC filing, “If we do not successfully execute our liquidity plan, we face the risk of not being able to continue as a going concern.”

LDK Solar has dropped from over $9 to under $7 in the past two days.  This is a perfect example of why managing your sell stops is important.  Looking back at the chart some well placed trailing stops would have exited the position on Nov 24.  There was also a strong jump up on Dec 4 where setting a stop at $8.50 would have saved some profits.  The slow stochastic is showing an uptick in the %K line, but this may continue to sell down. 

Rentech is a clean energy company that has been around for a very long time . They’re testing some interesting technology and seem to have a fairly repeatable process.  We’re still undecided about getting back in.  The debt-to-equity ratio is a little high but this still might be a good short term play with a tight sell stop.  There is support near 1.44 and 1.38 which might prove to be a good entry point in the future.  It’s also still above its 21 day SMA which is a good sign for now.

RTK

A123 Systems and Detroit Edison managed to land $5 Million for battery research.  There was quite a jump up in price from $14.97 all the way to $17.49 at its highest.

The Cleantech revolution has left some out in the cold.  Evergreen Solar recently got beat down prior to earnings and is going to shut down their manufacturing facilities in Massachusetts.  Guess where the new jobs will be located?  China.  Nevermind the fact that they received $58 million from the state taxpayers, and a portion of that was funded by the bail out–I mean Economic Stimulus Plan.

Green has a different ROI than IT.  Some are predicting 15-18 years to get a return, while IT is geared to provide a return in 5-7 years.  What we are seeing is a trend to invest in IT driven green initiatives such as the smart grid or to get into other green investments later in the life of the company.   Solar manufacturing is suffering right now because of an over supply with low demand.  If you’re starting a green energy company the safest place to find funding will be in software that contributes to the green economy.