Will FuelCell Energy take off again?
Have we finally reached Peak Football with the Euro Super League fiasco – and hence peak financial speculation? When the proposal hit the headlines last week, the chorus of complaint was deafening (from the vested interests, of course). It certainly amused me when the main objection was that the new venture was ‘clearly a cynical ploy to make money’. As if the ‘sport’ had not become one giant money-spinning machine already with players’ salaries in the stratosphere (Messi ‘earns’ a stunning $127 million a year, or $2.5 million a week. If he performs 2 hours a week on the pitch, that’s a cool $1.25 million per hour – which happens to be just outside my pay grade). To cap that off, the sport bores me to tears, except as played in the lower leagues.
And one more gripe: many clubs have no UK-born players in the top squad. How can Manchester City, for example, call themselves a Manchester club when no-one hails from there? A mystery indeed. But I come from a time when every Saturday the players (all local lads) kicked around a weighty and very wet leather ball in baggy shorts in the mud and received at most ten shillings a game. But doesn’t this highlight what has happened to life in general over the years? An explosion in prices, wages, salaries? How much farther can this go on?
But I venture to suggest that this little failed episode in football may mark a high-water mark in financial speculation coming soon. Revenues from TV keep the clubs afloat and if Netflix’s recent results is anything to go by, audiences seem to be flat-lining as we emerge from lockdowns and that may well spread to sports viewing.
And with companies and individuals up to their eyeballs in debt, it would not take much to topple this house of cards.
Corn and Soybeans shoot for the moon – with Wheat not far behind
Way back in May last year, I issued a Special Report to my VIP Traders Club members alerting them to an incredible once-in-a-lifetime opportunity to buy US grains at historic lows prices. This was the soybean chart Alert I issued then:
Of course, back then, very few traders were interested in taking the long side. There were record crops coming in and stocks were piling up. But I knew from my experience with these cyclical markets that ‘the cure for low prices is low prices’. In other words, with low corn and soy prices, farmers are discouraged from planting these crops next year and move to alternative better paying foods.
But a glance at the monthly chart showed me that prices were sitting on a 12-year rock of support and given the wave count, odds were good that buying there was a low risk/high prob play especially given the huge momentum divergence. After all, back in May, who knew what the weather would hold in the growing areas, or what the demand for bio-diesel for corn would be. Or what the demand from China (usually massive importers) would be, despite the ‘trade war’ that was flaring up at the time?
Yes, on paper, the risk for further declines was there, but with bullish sentiment weak, the time was right to launch a buying campaign and we started buying around the $9 region in true contrarian style. And this is the updated chart
And what a chart! My original major target at the $12 area has been blown away and we are up to over $15 in the stunning explosion of prices in a year. The only comparably similar bull move was the 2007/2008 advance to the $16 top.
Strangely and gratifyingly, I see few MSM references to this grain price explosion that is happening under the radar to most. And that’s just the way I like it. When they do finally catch on, that will be the time to take major profits. All I need to see is a major US magazine cover with Corn and Soybean fields pictured and a headline such as “Food Now Un-affordable!” and I’ll head straight to the Sell button.
Incidentally, the latest ‘Save the Planet’ conference has wrapped up with even stricter targets to reach ‘net zero’ announced. If I have this right, that means less CO2 and less plant food for soybeans and corn leading to lower yields – and more famine and higher grain – and staple food – prices. Hmm. Maybe that is what is really behind the storming bull markets we are seeing.
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Carbon capture is all the rage
Together with the headlong rush by governments and now companies into ‘net zero’ targets, one sector that benefits from this is the ‘carbon capture’ start-ups. One such US outfit is FuelCell Energy and I have been tracking it for some time. It has two strings to its bow – carbon capture and hydrogen fuel technology.
As far-fetched as it may seem, hydrogen is a fuel has serious applications to power large vehicles including trains, ships and even airplanes (but I hope not dirigibles, as the Hindenburg catastrophe example in 1937 highlights).
But with many hurdles to jump, all of these new technologies will not see straight-line up progress – and the shares will likewise see major set-backs from the initial enthusiastic gains. Buying in these set-backs is the lower risk option, rather than chasing them on strong rallies. Here is the long range monthly chart
This chart shows the roller-coaster ride enjoyed over the years – from the surge as it was caught up in the dotcom boom in the previous century, to the recent take-up by the WallStreetBets crowd. But it has scraped along the bottom just around the 20 cents ‘floor’ for much of the past few years.
And then last November, it started taking off and reached the $30 high in February but then sank back and is currently into chart support. I expect shares to resume their uptrend from around here and Pro Shares members are currently long.
