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Move Slow With Fuel Cell Makers or Risk Shock

While not particularly impressive in isolation, the earnings numbers are pointing in the right direction. FuelCell Energy's loss narrowed from 7 cents per share in the same period last year to 6 cents per share this year. This is after the Department of Energy Advanced Manufacturing Office gave FuelCell Energy a $2.8 million continuation contract last week.

About 10% of FuelCell Energy's float is shorted based on the latest report. If we've learned anything from Tesla's (TSLA) stock, we've learned that a highly shorted stock can continue moving higher for a long time. FuelCell energy may not produce a profit, but it may produce another short seller casualty if you try to fade it too early.

Bottom line, don't chase this one and if you want to get long, wait for a pullback below $3.50. It may not retrace that far, but your risk is much lower. I always say it's better to feel bored and missing out than to watch your account shrink.

I think all four have potential to continue higher, but Wal-Mart's stamp of approval should help Plug Power and Ballard Power Systems gain momentum long after the media excitement fades. Even so, after the massive run higher the odds favor investors who sit on their hands until Plug Power becomes available for under $9.50

On Tuesday, Fuelcell will probably open for trading above $4.30, albeit it's likely to be a gap and trap (open near the highs). If you want to gain exposure, let some emotion evaporate and profit taking to bring the shares lower on a retracement. That way you can start out on the right foot and not let emotion get the best of you.

At the time of publication, Weinstein had no positions in securities mentioned.

Follow @RobertWeinstein

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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