PowerShares WilderHill Clean Energy (PBW) (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

My earlier lots of PBW (here and here) have done extremely well, up more than 25% at their peaks. There was a sharp sell-off of PBW this week, and I decided to double-down and take advantage of the sale. I really wanted to buy yesterday when the price was even lower, but I kept getting outbid. With the price of oil rising inexorably, I have no reason to think alternative energy stocks will suffer.

  • Price momentum (PPO) — very strong, although dipped during sell-off
  • Relative strength (RSI) — increasing again after sell-off
  • Trend (ADX) — still very strong, although buying pressure (+DI) and selling pressure (-DI) equalized during sell-off
  • Volume — six weeks of steadily increasing volume

Based on technical analysis, MarketEdge calls PBW a "strong buy" in a "strong upward trend" that is currently "oversold" and at a "good entry point."

Sell

gain Bottom line
-3%

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!