Four Reasons To Short Solar ETFs

The solar energy sector continues to witness whipsaw action and downward price pressure throughout the industry is likely to prevail in the near-term future as supply and demand imbalances continue to widen. 

Fundamentally speaking, the sector has numerous headwinds and continues to remain weak.  As a whole, the sector has been plagued by falling prices, inventory buildups and extension of credit terms.  In fact, Stephen Simko of Morningstar suggests that the industry will likely bottom out in the coming months despite witnessing increased global installation activity due to lackluster demand, which will make it very difficult to reduce inventory levels and keep factories running at high utilization rates. Read more of this post

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Five Alternative Energy ETFs Facing An Uphill Battle

Most recently, President Barack Obama addressed rising gasoline and energy prices by stating that it is imperative that the US utilize sources other than fossil fuels to feed the nation’s energy appetite and lessen foreign dependency on crude oil.  

As retail gasoline prices sit near $4 per gallon in certain parts of the nation and the price of crude oil hovers around the $100 per barrel mark, the appeal for alternative energy such as solar, wind and ethanol become that much more attractive.  However, at the end of the day, renewable energy continues to remain significantly more expensive and less efficient than its fossil fuels competitors.  Read more of this post

Four ETFs Likely To Be Impacted By Obama’s Energy Plan

In an attempt to address the rising costs of fuel and crude oil, President Obama stated that it is vital for the US to embark on a long-term plan to tap domestic resources and soften its dependency on foreign oil, which could potentially influence the iShares Dow Jones US Oil & Gas Expl and Prod (IEO), Oil Service HOLDRs (OIH), Market Vectors Glb Alternative Energy ETF (GEX) and the Market Vectors Uranium & Nuclear Energy ETF (NLR). 

The President specifically called for new incentives to boost production of crude oil, gas and biofuels as well as more stringent fuel efficiency standards on vehicles and further development of alternative energy solutions.  In particularly, President Obama reaffirmed his support for nuclear power and the usage of natural gas.  Although the specific incentives are still a work in progress some could include shortening lease terms, speeding up the process of securing lease and drilling permits, lowering the royalties paid to the federal government for leases and expanding production areas offshore. Read more of this post

Renewable Auction Mechanism May Boost Solar ETFs

Recently, the State of California proposed a decision to adopt to a renewable auction mechanism (RAM) which enables rates to be set my market-pricing, which could lead to a new avenue of growth for ETFs like the Claymore/MAC Global Solar Energy Index (TAN), the Market Vectors Solar Energy ETF (KWT) and the Market Vectors Glb Alternative Energy ETF (GEX).

This proposed subsidy is expected to work as a feed-in-tariff, which will use market-rate pricing that is being set and driven by a bidding process, as opposed to utilizing rates that are being set and driven by the California Public Utilities Commission.  A major goal of this new subsidy is to enable developers of solar power to furnish adequate returns and to soften the blow to ratepayers which are being overburdened by excessive subsidies.  If this can be achieved, it is expected that the solar industry will see a massive expansion. Read more of this post

Four ETFs To Play China’s Energy Stance

According to the International Energy Agency (IEA), China has taken the top spot as the world’s largest energy consumer and as a result is pledging to develop cleaner energy.

Last year, China consumed 2.252 billion tons of energy equivalents, almost 4% more than the United States, driven by growth in its industrial and infrastructure sectors.  As for the future, the nation is likely to continue to see growth and is expected to witness a further increase in its appetite for energy.  To help balance the correlation of growth and carbon dioxide emission, China has agreed to reduce its emissions based on GDP output through the use of alternative energy sources.  Read more of this post