One of my subscribers asked me to do a chart evaluation on FCEL and the prospects for the future based on the breakout seen this past week. Here is that chart evaluation:
The stock has been on a 6-year downtrend since 12.57 was seen on December 2007. The stock bottomed out on October 2011 at .80 cents. That low was successfully tested in December 2012 with a drop down to .84 cents.
Since June 2008 the stock has been under the 200-week MA after having it tested once in August 2008. Since then the stock has not been anywhere near the line. The stock has also been below the 100-week MA since August 2008 and did break above the line briefly for 6 weeks in February 2012 but after it got below the line in April 2012 has also been below the line until this past week. It should be mentioned that the previous break of the line in Feb12 only carried the stock .50 above the line. The 100-week MA is currently at 1.08 and therefore the stock is already .45 cents above the line.
The stock closed on the highs of the week and it is highly probable that further upside will be seen this week with the 200-week MA, currently at 1.70, as the objective. Since the line has not been tested for almost 5 years, and there hasn't been any specific news to have caused this rally, it is likely the stock will fail to generate a weekly close above 1.70 the first time around. Nonetheless, with the 100-week MA being down at 1.08, it is now highly unlikely that line will get broken to the downside, meaning that this break to the upside is of consequence and not likely short-lived.
It should be mentioned that FCEL has not yet shown 1 single profitable quarter since its inception and though some of this rally can be attributed to the fact the company stated a couple of weeks ago that this earnings quarter which reports on June 6th will show better results, it still needs to be mentioned that the earnings are expected to be -.04 cents versus last quarter's -.06cents. ......continued
When this company reports positive earnings, it will likely pop up strongly and an uptrend of consequence will likely be seen.
The chart shows decent to strong intra-week and weekly close resistance between 2.00 and 2.31. It is doubtful that anything will happen at this time to cause the stock to break above that level.
The chart suggests the stock will be in a trading range for the next few months between 1.29 and 2.00 that will expand thereafter to 1.55 to 2.31 until the following earnings report comes out in September. Based on the action on Friday, if that does not get reversed immediately, this stock will become a good purchase thereafter on any dip near the 1.30-1.35 level.
It should also be mentioned that this stock has a rounded bottom that has taken almost 3 years to build. Rounded bottoms are extremely powerful when built. They suggest that the company has gone through a long restructuring period but that the restructuring is complete and that the company is ready to start an uptrend and try to regain past glory. In this particular case that would be getting back up near the 12.57 all-time high.
The stock will have to accomplish that in phases that could last as much as the 3 years that it took the rounded bottom to be built, though in reality the time frame is not something that can be depended on.
Resistance will be found at the $2 level, at the $4 level, at the $7.50 level and at the $10 level. Figure it could be 2 years to get back up to $10 but if the stock is able to get established above the 200-week MA as well as above the $2 level, the probabilities of the stock getting up to $10 at some point in the next 2 years will be high.