PowerShares WilderHill Clean Energy (PBW)

Company

PBW 1-year chart PBW 1-year chart

"The PowerShares WilderHill Clean Energy Portfolio (Fund) seeks to replicate, before fees and expenses, the WilderHill Clean Energy Index, which is designed to deliver capital appreciation through the selection of companies that focus on greener and generally renewable sources of energy and technologies that facilitate cleaner energy." (company website)

PBW 6-month chart
PBW 6-month chart

Buy

Like the rest of the market, this Exchange Traded Fund (ETF) has been hard-hit in the recent volatility. It is now down 15% from its recent high. The need for alternative energy can only grow, so I expect PBW shares to rise in price.

  • Price momentum (PPO) — badly beaten down
  • Relative strength (RSI) — below neutral
  • Trend (ADX) — just below the threshhold (20), despite battering
  • Volume — huge recent volumes

Based on technical analysis, MarketEdge calls PBW a "long" but with "strongly deterioriating conditions" and "oversold."

Sell

gain Bottom line
15%

Arrrrgh! After watching PBW climb to one new 52-week high after another, I've watched it retreat below the 50-day moving average, then begin to stretch out the lower Bollinger band. Looking at previous down-cycles I had held on believing that it would rebound again after breaking through the 50-day moving average. When the decline threatened to erase all profits, I sold all three lots, two for modest profits, one for a small loss. General pessimism about the economy seems to have overcome a sector that should be very strong in a time of $100/barrel oil prices, alternative energy.

Talk about snatching defeat from the jaws of victory!