Measuring the Incalculable; Valuing the Intangible!

As stated many times during the course of the year, it had been my strategy to trade eco-stocks coming into the federal election. Some like CNM popped a bit earlier than I expected, and others like BBW didn’t seem to go anywhere at all. But now it looks as if there is perhaps a second charge brewing. I’d say it will coincide with the hype surrounding the Bali conference, which would make sense. But it could very well create a sector bull run for quite some time to come. Couple this with a new sustainability index in Australia, and you have a perfect storm for these eco-stocks.

Before I get into a run down on some of these, I probably should give a round up of my last large group of trades, in the Gold sector. Whilst the market was chopping and churning, there was really only one thing to me that was trending well, Gold. However, with the middle east propping up the USD, this looks to be coming to an end, albeit for only a short time perhaps. I got out of LGL in the high 3’s, as the momentum seemed to leave, but Gold in AUD terms, kept trending.

It now looks as though Gold in AUD, is for the first time in a number of months, headed to set a new lower low, and I will be stopped out in the process. I’m not complaining however, the r/r was fantastic, and the set up almost perfect. They don’t seem to come around very often like that. I suspect that this is going to retreat to between $87 and $85 (The equivalent of an ounce of gold in AUD at $850 to $870), and consolidate before its next move towards the larger break out targets.

Now we can move onto some of the eco-tech type stocks I tend to look at. The first one being COZ, CO2 Group Limited. They develop carbon sinks and sell the credits. At the moment they remain the only leverage you can get to the carbon market on the ASX. As was planned elsewhere, I bought these guys the Friday before the election (a little higher than I wanted unfortunately), and got a 15% pop on the Monday. I don’t think these guys have much short term technical range to move. But certainly, exceeding break out targets looks long term bullish for mine. Perhaps a maximum 10% gain short term, but it looks like it may be one for the trend followers. And certainly if you are looking to gain leverage to the carbon market, it might be worth a punt.

This is perhaps my favourite eco-tech stock, CNM. Carnegie Corp have that CETO technology that you may have seen. It seems to be almost economically viable, and plans are afoot start rolling it out. There aren’t too many of these eco-tech stocks that have truly massive blue sky potential, and a realistic shot at it, but this is one. There is a Bollinger band squeeze on, and it looks to be on the cards for a breakout. I’ll be on it when it breaks out again.

GRK, Green Rock Energy perhaps provides the biggest potential profit in the short term. I don’t know too much about it, aside from the fact that is a geothermal company. But technically it looks good for a trade. The breakout target is double the current price, it has been consolidating very tightly, and hasn’t looked to dip in the very recent market turmoil.

The final stock I’m going to look at is GDY. Once again, a geothermal stock in a long term uptrend. Potentially only another 15-20% in it for the moment, but it is in an area where it allows tight stops, quick validation or invalidation and therefore a good R/R. It might be one for those trendy types to look at.

As you can see there are quite a few good potential trades out there in the eco-tech arena right now. Hopefully they do well in the near future. Happy trading.

Posted by Glen at 9:14 AM    

Labels: eco-tech