While economic worries have brought the S&P 500 to the brink of a correction this week (defined as a loss of 10% or more from its 52-week high), there's been one area of the market that's holding in remarkably well with several stocks at or close to new highs.
I'm talking about clean-energy stocks which have sharply outperformed this year and currently appear poised for further upside despite downward pressures seen elsewhere in the markets. Below is a chart of QCLN which is an index fund with a broad portfolio of US firms in the clean energy industry.
DAILY CHART OF CLEAN EDGE GREEN ENERGY INDEX FUND (QCLN)
QCLN is up 58% year-to-date and the Index counts Nio Inc. (NIO) and Tesla (TSLA) among its top holdings. Both companies are benefitting from a surge in new-energy vehicle sales in China which has helped push shares up tremendously year-to-date. A break back above its 10 and 21-day moving average would be bullish for QCLN.
In other areas, Energy experts say alternative power sources are finally economically viable after being subsidized by the government for years. Warren Buffet's January announcement of his intent to build the largest solar-power plant in the U.S. helped push Solar stocks to 52-week highs prior to the bear market.
Buffet's embrace of solar energy makes it clear that the technology to generate and store this alternative power has become progressively more cost competitive with other sources. The move also helps fulfill his environmental promises from the Paris Climate Change Conference while making economic sense for Berkshire Hathaway.
DAILY CHART OF INVESCO SOLAR ETF (TAN)
State mandates are also driving wider adoption of renewable energy after Nevada's announcement that utilities must get at least half their power from this source by 2030. Just 2 days ago, California announced plans to ban sales of gas-powered cars by 2035. These demands coincide with analyst's expectation that solar and wind power will cost less than coal by 2030.
Residential solar energy provider Sunrun Inc. (RUN) has been a big winner in this alternative energy space and this week's news of a 14-year high in new home sales helped pushed the stock to new highs.
DAILY CHART OF SUNRUN INC. (RUN)
Demand for RUN has kept the stock in a strong uptrend while finding support at its upward trending 10-day moving average. With its RSI and MACD in positive territory, the stock is poised for further upside.
While I've marked these stocks as having generally bullish charts, you can review Friday's MEM Edge Show for my refined view of the current market's condition as well as an outline of other industries and stocks that are setting up to be leadership areas once we turn bullish again.
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Warmly,
Mary Ellen McGonagle / MEM Investment Research
