Wednesday, June 9th, 2021
Fuel-Cell Power Plant Company Powers Up
Happy Wonderful Wednesday!
The month of June has been mixed when it comes to direction. Three days down and two up as I type on Monday. Often the Summer months are quieter with smaller movements as if it too is enjoying a vacation.
To review past equity candidates, scroll down. Several are also hitting all-time highs!
For today’s Trade of the Day, we will be looking at FuelCell Energy, symbol (FCEL). Before analyzing FCEL’s chart, let’s take a closer look at the stock and its services.
FuelCell Energy, Inc., together with its subsidiaries, designs, manufactures, sells, installs, operates, and services stationary fuel cell power plants for distributed baseload power generation. The company’s SureSource power plants generate clean electricity, usable heat, water, and hydrogen. It serves various markets, such as utilities and independent power producers, industrial and process applications, education and health care, data centers and communication, wastewater treatment, government, morcrogrids, and commercial and hospitality. The company primarily operates in the United States, South Korea, England, Germany, and Switzerland.
FuelCell Energy, Inc. was founded in 1969 and is headquartered in Danbury, Connecticut.
I looked through a lot of charts over the weekend. I zeroed in on FCEL because it had a pullback since February 2021 and now looks ready to climb to new highs.
On the ADX indicator below the chart, notice how the green +DI line is just now climbing toward the red line and the black line may again soon turn up to show strength. These are all signals of strength with the thought that it may continue to climb. You’ll want to wait for the +DI to cross -DI (Green over Red).
For those who want more info on ADX, I give more details in the section below, or scroll down to the trade info.
Average Directional Index (ADX) Points to Direction and Strength
ADX is an easy indicator to interpret. The +DI line (green) is bullish and when it is on top, it suggests price is going to head up. When the -DI line (red) is on top, it suggests price is going to drop.
The black line is the strength line and when it heads up, it is telling you strength is moving into the DI line that is on top and in control. When the ADX line has been heading down, the DI line on top has been weakening and is ready for a change.
When the DI lines swap places and cross up and the ADX heads up, it suggests strength is moving into the new DI direction.
ADX signal = Profit Payout
Each candle on the chart represents price movement of a week. As the plus DI heads up and toward the black line and remains above the red line, it suggests there is bullish strength that could continue to grow, especially once the black line starts to turn up. If price continues to move up, the ADX line (black) will turn to head up to imply that strength will continue to support the trade. As long as the ADX is heading up, it means it is supporting the bullish- up direction.
I am looking at its chart and possible trade on Monday, but the pattern should hold. You don’t want to consider entry if the current candle were to drop below the lines drawn on the chart. Think of it as dropping through a floor. If that happened, you would not enter or you would close the trade.
FCEL Potential Trade
FuelCell Energy (FCEL) ended the week on a bullish note with 4 up-weeks in a row. Its pattern should remain intact as long as price keeps rising. Notice the + DI is just below and ready to cross above the -DI. Don’t consider entry until the lines cross. We want the + DI to remain above the -DI (green above the red) to consider a trade. Green line on top is bullish.
Price is likely to rise further and eventually above 10.90 ish for entry. Its first target is 12 as the plus DI (green line) moves up and the ADX (black line) rises. Its current uptrend should remain intact, and price should continue to rise, perhaps even higher. We will keep an eye on FCEL over the course of the next couple weeks.
I am looking at charts on Monday, so prices are apt to change a little by Wednesday.
The short-term price target for FCEL is $12, then 13, perhaps, higher to 14.
To buy shares of FCEL today price would be approximately 10.90. If it reaches its near-term target of $12 that would be a rise of $1.10 or 10% profit in a short period of time. If you bought 50 shares the total cost would be $530, and you would earn $50.50 total on the fifty shares.
This said, option trading offers the potential of a smaller initial investment and higher percentage gain even when price is expected to rise. Let’s take a look
If you bought one Call option contract covering 100 shares of FCEL’s stock with a July 16th expiration date for the $12 strike and premium would be approximately $1.10 today or a total of $110. If price decreased the expected $1.10 to $12 target over the next few weeks, the premium might increase approximately $1.10 to $2.20 per share or $220 on your 100-share contract. This is a gain of $110 on your $110 investment or a 100% gain.
Remember you can close an option trade anywhere along the line before expiration to take gains or stop a loss.
The example above is a comparison of an investment of $530 and a $50.50 gain versus a $110 investment and $110 profit. Big difference.
Options can offer a win, win, win trade opportunity. They often offer a smaller overall investment, covering more shares of stock and potentially offer greater profits.
If you are having any kind of trouble taking advantage of these trades, I don’t want you to miss out. I have put together programs that help traders just like you access the potential profits that options provide. I write like we are having a conversation, so the information is easy to understand and apply. Be sure to check out the programs shared in this email and we will make it easy for you to get your share.
I love to trade, and I love to teach. It is my thing.
PS-I have created this daily letter to help you see the great potential you can realize by trading options. Being able to recognize these set ups are a key first step in generating wealth with options. Once you are in a trade, there is a huge range of tools that can be used to manage the many possibilities that can present themselves. If you are interested in learning how to apply these tools and increase the potential of each trade, click here to learn more.
Past trade update:
Nine weeks ago, we looked at First Solar (FSLR). It got off to a slow start and has been down 3 weeks and is down the last two weeks a little. It is below its 100 strike and has until June 18th. It will have to have big moves to make it.
Eight weeks ago, we studied Lowes (LOW). It rose to 215 well above its 210 target. It has been down the last few weeks.
Seven weeks, we covered Target (TGT). It went up to 232.66 over 220 target. The premium when it was listed was 4.75 and it more than doubled. Awesome trade and it has until June 18th.
Six weeks ago, we looked at Silver ETF (SLV). It is at 25.90 and two weeks ago went as high as 26.39. It is above its 25 target and has until June before it expires.
Five weeks ago, we checked out Disney (DIS)- it is up this week after being down. It’s at 178.65 and went as high as 180.14 with a target of 190 and has until June.
Four weeks ago, we examined MO. It is up a little this week to 50.18 area. It has a 52.50 strike with a June 18th expiration date.
Three weeks ago, we looked at IWM, thinking it and the market as a whole may have dropped and slipped into a correction. IWM dropped as low as 214 with a 210 target and then climbed back up to the area above the line. It was a quick small trade and now looks as if it has recovered and is moving up.
Two weeks ago, we studied Facebook (FB). Last week, it climbed as high as $333.78. It is up and back to $332.05 as I type on Monday. It has a target of 345 with a July 16th expiration.
Last week, we checked out Advanced Medical Devices (AMD). This week, it is down a little but mostly flat. It has an $85 target and a July 16th expiration.