November 2009 Archives

After years of over promising and under delivering, the solar Industry is finally starting to show some interesting developments which have the potential to make solar power as cheap as fossil fuel on a cost-per-watt basis within five years. Getting us to that state, called grid parity, would require solar companies to produce power for around $1 a watt. Is it possible anytime soon?

Many analysts think so and the target date being touted around is 2015. The reason for this fresh optimism is a mixture of technological development and simple economics. Traditional conductive materials make up 40% to 50% of the cost of a finished module. Newer conductive materials (including, amorphous silicon, cadmium telluride and copper indium diselenide) only need to be about one micron thick, so material costs are significantly reduced.
But thin film solar cells are just the beginning. Here are a few more examples of the most cutting-edge and interesting advances in solar energy and the companies behind them.

Solar Energy - from salt. Rice Solar Energy, a spin-off of United Technologies, is planning a solar energy installation in Riverside County, California. Salt - 4.4 million gallons' worth will be stored in a 538-foot tower surrounded by 18,000 mirrors called heliostats. The heliostats will aim light at the tower, subjecting the salt inside to such great temperatures that it melts, which in turn creates steam which then spins the turbine thus creating electricity.

Internet access - from sunlight. Late last year, Meraki, a provider of wireless networking solutions, developed a solar self-powered WiFi device. The Meraki "Solar" uses a solar panel and a solar-charged battery to provide Internet access in hard-to-wire areas. The units can be mounted on roofs or poles or anywhere else that receives sun exposure.

Stocks started the week off with a bang; it seems as though Friday's option expiration was holding stocks down, rather than propping them up. With that out of the way, an economic calendar chock full of data and thinly traded markets we can't help but looking higher from here. Thanksgiving has always seen investors give thanks by buying up shares of stock, so we are expecting the December S&P to see 1130ish at some point this week.

Coming into this week, we were looking for weakness in early Monday trade with the premise that weakness could be an opportunity to "get long" with either options or futures. However, that weakness never arrived. Instead, the stock index futures opened up firm on Sunday evening remained overall positive throughout the entire session.

Equity index futures were outperforming before the day's news, but better than expected home sales and a weaker dollar were the icing on the cake for stock market bulls. According to the National Association of Realtors, October home sales rose more than 10%.

The trend is higher and the volume is light but the data is thick. Despite the shortened trading week, we will hear about the latest GDP reading, consumer confidence, the FOMC minutes, new home sales and Michigan sentiment as the week progresses. Barring any large surprises in the data, and aside from potential back and fill trade in the overnight session the market "feels" higher from here. Our first resistance in the S&P is near 1024 but we think that 1030 is in the cards. If you are trading the NASDAQ, we see resistance near 1820 but feel like 1840 is possible, at which time we would be bearish. Look for resistance in the Russell near 606 then again near 625.

It is not rare to come across definitions of trading as gambling. Although this is intended to show trading as a kind of fool's errand with little benefit to a reasonable person, in fact, gambling does resemble trading in some respects, with hardly the scandalous results claimed by the loud critics of the practice. Both gambling and trading are about risk controls, and both of them are not for all kinds of people. If you're an impulsive person who doesn't like analysis, and if you don't appreciate the value of patience and self-control, it's unlikely that you'll perform well in either gambling or trading. On the other hand, many great traders and investors are also great card players (in bridge or poker, for example), and there's every indication that the same qualities lead to success in both types of activity.

It isn't uncommon to see consolidation after a large market move and that is exactly what we got on Tuesday. The stock rally was halted by a rally in the U.S. dollar and technically overbought market conditions.

The earnings reports offered by retailers were better than expected, but the good news was served with a bit of skepticism going into the holiday shopping season. Following several weeks of gains, the news provided little incentive for fresh longs. Also, the retailer revenue warnings came after the market enjoyed massive gains posted on better than expected retail sales data.

The major indices dipped in early trade, but the selling was muted and buyers were present. Although much of the buying was likely shorts taking the opportunity to cover at better prices, failure of the December S&P futures to trade below 1100 suggests that another wave of buying could be seen before a reversal can occur. That said, we still lean toward bearish strategies on rallies. Don't chase the markets lower!

We can't rule out a run to retest Monday's highs and likely reach for stops above. Look for resistance in the S&P futures near 1117 and could possibly see prices as high as1130 but we grow bearish above the first resistance. If you are trading the Russell, we would see 615ish in the next day or two at which time we would be bears. The NASDAQ begins looking like a good opportunity for the bears near 1825 but 1840 is possible.

Global Oil & Gas Companies Dominate; Non-Western Companies Exert Increasing Influence

SINGAPORE, Nov. 16 /PRNewswire/ -- Despite unprecedented price volatility, global recession, swings in demand, and the "greening" of the world's energy priorities, major oil companies maintained their stronghold as the world's top-performing energy businesses, according to the 2009 Platts Top 250 Global Energy Company Rankings(TM) announced here Monday evening.

Houston-based ExxonMobil Corporation retained the number one spot in the Platts Top 250 for the fifth consecutive year in the roster's eight. In second and third place were Chevron Corporation and Royal Dutch Shell plc, followed by BP plc and Total SA in fourth and fifth, respectively. Altogether, integrated oil and gas companies (IOGs) carved out the 13 top spots in the 2009 Platts rankings, and took 30 of the top 50 places.

"Besides showing the continued leadership of the international oil companies, the rankings highlight the rising importance of emerging market entities and stronger performances by utilities," said Platts President Larry Neal. "Clearly, the ups and downs of the rankings reflect the opportunities and challenges of the various sectors - exploration and production companies benefited from new finds, utilities enjoyed green-related investments, and storage companies got a boost from the slow demand that bit into refiners' margins."

Latin American IOGs played a more prominent role in the 2009 rankings with Petrobras leaping to sixth from 12th place and Colombia's Ecopetrol joining the list for the first time in 30th place. Also new to the rankings was Brazilian storage and gas company Ultrapar Participacoes SA, which moved in the 202nd spot, giving Latin American companies 14 spots on the global list.

Gold is one of the hottest topics of these days, as many forex traders note the new records broken by the commodity, and speculate on the sparkling future awaiting those who prefer it as an investment medium. Gold had been doing very well over the years as the global flood of money caused just about any tangible asset to rise in value, including real estate, commodities, stocks, and many others. In these difficult times, gold's rally has been one of the more resilient, supported by its role as a safe heaven in times of crises of confidence, and its ancient character as a store of value. Many are further convinced that the extreme fiscal irresponsibility of the government, and the unlimited and general bailout policies of the Federal Reserve will eventually result in a collapse of the American economic system, against the turmoil of which gold is seen as a good insurance. In this context, how high can gold go, and what may halt its insistent ascent?

It's common knowledge that the rise of gold depends on the two factors of inflation, and fear. Usually, inflation occurs when the economy is growing, and when there's growth, there's little sign of panic or fear among market participants. Inflation leads investors to diversify, and gold appreciates. In the other case, where fear prevails, gold is expected to appreciate as a source of safety against the unreliability of other kinds of financial assets. Although so far gold has not demonstrated that conviction forcefully, as investors flock to government paper in times of crisis, its quick return to popularity shortly after periods of turmoil demonstrates that traders attach fundamental value to the asset at times of long-term uncertainty. Still, as we see, the two conditions of gold's appreciation are more or less mutually exclusive; if there's inflation, there's probably little fear, and if investors are fearful, inflation is likely to be subdued.

The mega-bull gold market, if we substitute this term for a gold bubble, would materialize if these two factors of fear and inflation can somehow come together to create optimal conditions for very sharp appreciation. If dollar begins to depreciate out of control, even without domestic demand, inflation would be inevitable, with widespread panic and fear leading to the complete destabilization of the system. If the U.S. dollar ceases to inspire confidence as a source of value, gold could easily skyrocket to astronomical levels of many thousands of dollars.

The problem with the "Gold 5000" or more scenario is that it is very difficult to see the dollar lose it's status as the global currency in the next five ten years barring a major economic cataclysm destroying the international financial system. With about two thirds of global reserves denominated in the U.S. dollar, most of the debt issued in the world is also sourced through some kind of dollar borrowing, which leads to the currency gaining in value as economic confidence evaporates. The financial actors, including governments, and major financial institutions will do anything to prevent a dollar collapse. But they may fail given how optimistic their assessments usually are, and if they do, nothing will be able to halt the rise of gold. No forex trading course or government briefing will tell you how to anticipate such a situation, and the only way of avoiding being at the bottom of the list of losers is remaining up-to-date with the commodity market at all times. One thing is for sure: gold has held its value over the centuries, and it will remain an attractive asset regardless of the wisdom of future decisions taken by politicians and investors.

I haven't pulled up the S&P 500 with oscillators to determine for sure if we're seeing a double top or just a 'pause that refreshes' before powering to new highs.

What seems to be 'certain' (for the moment) is that weakness in the dollar seems to be correlating rather strongly with strength in the US equities market. There seems to be a powerful 'carry trade' on the dollar where synthetic shorts are being created by large institutional entities that can borrow usd for effectively 'free' and placing levered trades on govt backed bond instruments elsewhere (like the aud) where interest rates are much higher.

If/when that trade unwinds, it will look like a movie theater where the curtains are on fire -- powerful upsurges in the usd, coupled with a downdraft in the equity markets is what would be 'expected'. Of course, the 64 usd question is, when?

Unfortunately, a carry can last for days, or years as in the case of the jpy carry that persisted for years. So getting the timing right, while lucrative if right, can be maddening and account draining when not.

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