Trump is back and spooking Wall Street again. But when it comes to the emerging hydrogen economy and three of its top stocks, its best to follow price action in hydrogen stocks than fiery threats on Twitter.
By some accounts, it was a terrible Turnaround Tuesday for investors. Trading at its best levels in more than two weeks and further extending the market’s rally off its September’s corrective bottom, gains for the broad-based S&P500 went up in flames at the stroke of less than 140 characters on the keyboard.
Behind the market’s about-face, back at the White House for barely a day after being released from Walter Reed for Covid-19 (the disease caused by the novel coronavirus), President Donald Trump tweeted he’s rejected the Dem’s stimulus package proposal and won’t play nice with others until after the election.
Yet, despite losses of 1.42% for the S&P500 and heftier declines across many industries and top market influencers Apple (NASDAQ:AAPL), Target (NYSE:TGT), Disney (NYSE:DIS), Delta (NYSE:DAL) and others, hydrogen stocks largely maintained their cool.
Behind the seemingly defiant bullish price action, a McKinsey & Co. study titled, “Road Map to a US Hydrogen Economy” and virtual road show of promotion this week appears to have taken precedent. With that in mind, for today’s investors, with a broader market still supportive of buy decisions and price charts that look actionable, it’s time to explore three ways to gain risk-adjusted exposure in the hydrogen economy.
Hydrogen Stocks to Buy: Plug Power (PLUG)
Source: Charts by TradingView
The first of our hydrogen stocks to buy is Plug Power. One of the pioneers in the hydrogen space, PLUG stock has its share of prominent critics like short-selling outfit Citron Research who called Plug Power the “anti-Tesla.” Shares also offer the risk of spooking investors with the occasional secondary offering. The thing is, Plug Power and all of today’s hydrogen stocks, remain mired in red ink and sport negative cash flow.
Despite those hazards, bullish momentum continues to build in PLUG. And on the weekly price chart, after bursting out of a well-supported corrective base nearly two months in-the-making, shares are signaling even more upside today. Currently, this hydrogen stock’s weekly stochastics is just now confirming Plug Power’s growing price strength as the indicator generates a crossover signal in neutral territory.
I’d love to say wait for a pullback, but the better recommendation is to purchase the Jan $20 / $25 bull call spread. This strategy allows investors to ride likely momentum to big-time profits with minimal downside risk in a notoriously volatile hydrogen stock.
Bloom Energy (BE)
Source: Charts by TradingView
The next of our hydrogen stocks to buy are shares of Bloom Energy. BE is another leader in this up-and-coming market. Like Plug Power, it’s a name that has been around for decades. But BE stock may fly under the radar as the stock IPO’ed in 2018.
A recent block sale of more than 9 million shares at $16.20 and nearly 7% of Bloom’s outstanding stock rightfully had investors’ attention. Hopefully, it had their wallets open too! BE is another name that’s rocketing higher and poised for further bullish momentum.
Technically, this hydrogen stock managed to hold support within its ascending base during last week’s institutional-induced drama. More impressively, shares have countered the selling pressure with a pattern breakout to fresh relative highs on the back of the McKinsey report.
With the stock up another 12%, BE has reclaimed its lifetime 50% retracement level. And like Plug Power, the momentum is being confirmed by a weekly stochastics crossover signal. Net, net it’s bullish. The exposure looks actionable today using the Jan $22 / $30 bull call vertical.
Ballard Power (BLDP)
Source: Charts by TradingView
The last of today’s hydrogen stocks to buy is Ballard Power. Shares are doing well this week, but not demonstrating nearly the tenacity of PLUG or BE stock. BLDP stock is up about 15%. It’s healthy but pales next to its peers’ gains of 26% and 38%. So, what gives?
The fuel cell specialist appears to be riding investor enthusiasm in the wake of this week’s report, but the other outfits stand to benefit more strongly from McKinsey’s hydrogen economy as key suppliers of the diatomic element. Still, “it is what it is” and on the BLDP price chart, it is looking mostly bullish for investors.
Technically, the past couple session’s gains have BLDP stock moving into the right side of a constructive second-stage weekly cup-shaped base. A deeply oversold and bullish positioned stochastics looks to support the price action. However, today’s rally has challenged the 62% retracement level and encountered some resistance.
To work around some potential near-term weakness in Ballard shares while still anticipating a base breakout in the months ahead, buying the Feb $21 / $25 call spread looks like a nice blend of risk-to-reward, off and on the price chart, for this hydrogen stock.
On the date of publication, Chris Tyler holds, directly or indirectly, positions in Plug Power (PLUG) and its derivatives, but no other securities mentioned in this article.
Chris Tyler is a former floor-based, derivatives market maker on the American and Pacific exchanges. The information offered is based on his professional experience but strictly intended for educational purposes only. Any use of this information is 100% the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.
