If anyone cares, I think this will pull a double bottom somewhere between 15-16 area. VSE should be going lower from here. I will look at it again under 17 to see what I will do with it.
why trade ethanol stocks tied to the price of corn and crude oil? you're banking on a positive correlation of ethanol to the price of crude oil, but that adds more factors that could cause the trade to go wrong. for example, corn is a trader's market right now and it has been skyrocketing for the last couple of months. also, stocks expose you to the events that occur to the company itself. i believe that there will be a correction in the markets until mid-year or so and the bear market would mean there will probably be much better opportunities than being a bull on ethanol. if you're dead set on this idea, why not trade the crude oil futures themselves? just my two cents.
Its not going to put in a double bottom right now nor tommorrow. Its going to take a week, maybe longer, and its on my list of things that I monitor on a daily basis. The fundamentals are not good *right now*, but they will be later and thats when this will make a double bottom. Give it a few weeks, I believe it will reach between 15-16. It might even get there sometime a little sooner. Im partially a momentum trader, but I also do a few swing trades. These plays are on the watch list.
BTW, side note, oil has to bust through the floor of 57.05 for it to go really lower. 57.05 and its all the way down from here.
http://stockcharts.com/h-sc/ui?s=VSE&p=D&b=1&g=0&id=p33402956688 I think its time now to get into VSE. This is rough speculation, but I believe this might be the turning point. Im bearish on Pepsi and Coke for the long term. How does this relate to ethanol? High fructose corn syrup is the main ingredient to all of their soda drinks. Higher corn prices=lower corn margins. MCD and BKC are also holds in my mind. If the price of corn is going to continue to go up (and it will, just like oil did for the last two years). Then anything soft-drink or even related to soft-drink will go down as margins decrease. There is no way that the United States has enough corn to fuel this ethanol boom. There was no real oil shortage, but the shortgage of corn is very real.
Why mention the word ethanol, that word only came up when oil was trading above 75. That and the word HYBRID. Now that oil is below 55 do you really think they are going to push ethanol and use of hybrid cars....no way. I see even more SUVs on the road now than I ever did before. We as a country like to consume and with oil prices dropping off a cliff the use of this ethanol has been in my opinion, FORGOTTEN.
You have just stated the main reason why the use of ethanol will now go up. The government will soon mandate a higher blend of ethanol into gasolines because of lower oil prices and reduced interest in ethanol. Since you have lowered interest in ethanol, now the government will raise the blend. Remember, you already use ethanol with every fill of the tank. This makes perfect sense and its because of the American farm lobby. Mid-west politicians are not for the people, they are for the farmer. Democrats have strong ties to the farmers. Since oil is lower, there will be less interest in ethanol meaning that corn has a chance of going lower. No mid-west politician wants to see their corn farmers going broke. They dont want to anger Archer Daniels which provides a lot of campaign finance. The politicians are going to turn up the thermostat and have each gallon of gas contain 2.5 times the amount of ethanol that is normally in there. Right now, investors and traders are looking at the price of oil fall off the cliff thinking that Ethanol will go away soon. Its a headfake. The government is going to make you use ethanol whether you like it or not. The question now is where is the bottom for a company like VSE or PEIX. Im thinking that bottom might be near soon. Now we have all our Democrat Senators and Representatives all seated. How soon will they have the blend turned up? Especially when the governors of 37 different states have formally asked to have that blend turned up... http://seattletimes.nwsource.com/html/businesstechnology/2003519201_stoxcenter11.html Dont talk to me about sugar, the government only wants corn to be used... Coke, Pepsi, McDonalds will have to lobby with more cash. Would the government put the farmers interests over the common citizen even if it does obvious harm to the system? Smoot-Hawley is all I have to say. I would prefer a little more bearishness in the energy market before attempting such a play. Im going to see what happens next week though. I still feel oil is going to 48 or 43 dollars a barrel and the action on Friday was short covering. http://stockcharts.com/h-sc/ui?c=$BPENER,uu[h,a]waclyyay[pb40!f][vc60][iue6,12,9!lj[$spx]] I dont feel the BPI, according to the above chart, has reached an exact bottom. The bottom for the above chart could be anywhere between 12-30. My gut tells me that VSE could bottom between the 14-16 range and then stage a run into the 20s. So the switch will be hit in the next few weeks. . .
hangingman good morning. Take a look at VSN and then look at STP. Why the difference? They are both alternative? Let the stocks tell you what is really happening: Solar is for real ethanol is not. My stepfather is an architect so I see how new building from Tokyo to the US is using green technology in a variety of ways. This is all happening NOW. Solar panel sales are off the chart. I own WFR in this sector and am very, very happy. I don't have the symbols handy but one idea would be to find the low cap solar plays that were working when PEIX was they fell off for being too spec. The whole price of oil I fear is being manipulated from day 1. I believe their is a direct correlation to the rise of Hedge Funds and the new volatility in these commodities. It's lots of new, leveraged money that was never in this space before. I actually bought PEIX the day I learned about the Gates investment it was $18 I believe and went up $10 I did what anyone would do SELL. Brazil is doing a nice job with ethanol but sugar based. I think the move right now from pollution centers like china is going to be Natural gas transport, replacing busses etc. There was a piece in the Times over the weekend about how they are not allowing motorbikes anymore in one of the more industrial provinces of China. That means more busses needed and with the Olympics coming they need less pollution.
With all the surplus ethanol being forced into the energy mix I have to laugh. What ethanol really means is that each car in America will have over 10% LESS energy in their tanks (ethanol is less BTU/gallon than gasoline) and a reduced driving range. That means Americans will be stopping in and refueling more often - that is the real way to play this nonsense. Find out who benefits from higher frequency refills. I think 7-11 convenience stores are going to see a surge in business as people stop in more often to refuel and while there pick up cigarettes, antacids, cold drinks, lotto tickets etc. Corn prices are going through the roof which means that livestock foods (swine in particular) will be skyrocketing in prices since cheap corn was what was used to make pork products so inexpensive and cost effective. On a positive note I am happy to see that the costs of High Fructose Corn Syrup MUST go through the roof due to corn sugars expense going up. This may reduce the high glycemic insulin spiking sugar-syrups that are killing millions of Americans to be reduced from the products. This means diabetes, obesity and health care costs may come down in 10 years. People may live longer (short life insurance company stocks?). The only way this country is going to get off foreign oil is to put a permanent tax on gasoline to bring it up to a cost of $4-$5/gallon at the pump. The tax floats based on oil costs to cap the actual price at that target price. This FORCES the US to get off foreign oil and puts the money to work here on alternatives and gives us local jobs and income spendable domestically. And this is coming from a small government and anti-tax guy. But its the only thing that will prevent OPEC and other oil providers from screwing with any new initiatives to start up domestic energy production. Just as soon as we start putting billions (but it will take trillions) into domestic production they will lower the costs of oil - a high tax to hold oil at a sustainable high cost level is the only way to prevent that extortion from happening. Back to ethanol - I predict a popular rediscovery of the joys of moonshine and a cultural shift toward hard liquor again to absorb the large over supply of ethanol we are soon to have. At least in bottle form the stuff can be transported without corroding pipes and infrastructure. And as a sinful commodity form it can be taxed at a much higher rate than fuel politically can be at this time. TS
Doing my work on the beaten down solar names and noticing one daystar DSTI had a huge day yesterday on no news... contract coming?