FuelCell Energy, Inc. (FCEL) shares rose more than 3% as President Biden's pro-environment agenda offset weakness from lower-than-expected fourth-quarter financial results.

Key Takeaways

  • FuelCell Energy shares rebounded after President Biden moved to rejoin the Paris Climate Agreement and signed a series of executive orders.
  • The move came despite worse-than-expected fourth-quarter financial results and concerns over the valuation of fuel cell stocks.
  • FuelCell stock is approaching overbought levels and could see a bearish moving average convergence divergence (MACD) crossover in the near term, suggesting consolidation ahead.

The company reported fourth-quarter revenue that rose 54% to $17 million, missing consensus estimates by $50,000, along with a net loss of eight cents per share, which was four cents per share worse than consensus estimates. In addition to the lackluster results, Kerrisdale Capital recently shorted Plug Power Inc. (PLUG)—a peer in the fuel cell space.

Despite these bearish developments, President Biden's move to rejoin the Paris Climate Agreement and a series of executive orders designed to combat climate change—made within hours of the inauguration—helped propel solar and biofuel companies higher.

Chart showing the share price performance of FuelCell Energy, Inc. (FCEL)

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From a technical standpoint, the stock rebounded from reaction lows during Thursday's session. The relative strength index (RSI) remains just below overbought levels with a reading of 62.87, but the MACD could see a near-term bearish crossover. These indicators suggest that the stock could have a little more room to run, but the intermediate-term picture remains a lot cloudier and could turn bearish.

Traders should watch for consolidation over the coming sessions before a potential move lower. If the stock breaks down from trendline resistance, traders could see a move toward trendline support at around $13.00. If the stock rebounds from current levels, traders could see a retest of highs at $20.94 or a move toward trendline resistance closer to $24.00.

Tip

Short selling is an investment or trading strategy that speculates on the decline in a stock or other securities price. It is an advanced strategy that should only be undertaken by experienced traders and investors.

The Bottom Line

FuelCell Energy shares moved higher during Thursday's session. While the company reported worse-than-expected fourth-quarter financial results, President Biden's move to rejoin the Paris Climate Agreement and a flurry of executive orders offset the weakness. The stock could see consolidation over the coming sessions given its lofty RSI and top-heavy MACD readings.

The author holds no position in the stock(s) mentioned except through passively managed index funds.