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How to Trade FuelCell on Earnings Pullback

FuelCell is getting hit after reporting a disappointing quarterly result. Let's look at the chart to see how the technicals are setting up.

FuelCell Energy  (FCEL)  was getting smacked around on Tuesday, down 7%.

The stock was being sold lower after the company reported disappointing quarterly results. On the plus side, while shares are down 7%, that’s far better than the 14.5% loss the stock was sporting at the session low.

Both earnings and revenue fell year over year, while its fiscal first-quarter results also missed analysts’ expectations.

For a stock that has seen some blistering momentum earlier in the year, this was not a good earnings report.

Bulls were hoping for a catalyst to help spark some newfound momentum in the stock, but it doesn't appear that earnings will be that catalyst. 

While bulls are looking for a rebound - perhaps as they eye Tesla  (TSLA)  or NIO  (NIO)  - FuelCell has a lot to prove when it comes to the technicals. Let’s look at the chart.

Trading FuelCell

Daily chart of FuelCell stock.

Daily chart of FuelCell stock.

FuelCell actually has a pretty interesting chart here. Investors can see the nice bounce the stock has seen from the lows on Tuesday. 

Had it gone much lower, it would have tested the February low. More significantly though, it has its VWAP measure, as well as the 100-day and 21-week moving averages between $12.50 and $13.70.

Admittedly, that’s a wide range for a low-priced stock, but this one moves with pretty big swings. As such, we have to expect wide ranges.

Still, that may be the ideal buy zone if we get more weakness.

On the upside, it’s pretty straightforward. Bulls need to see FuelCell stock push through the $18.50 level and the 50-day moving average.

Once this area failed as support in February, it has become major resistance. Above it will put $20, then the 61.8% retracement near $22.40 in play.

The downside is a little bit more difficult. If this is a standard three-wave dip, we may have already seen the low. From here though, we would need to see some kind of rotation higher to believe the bottom is in. A close above the 50-day moving average would be icing on the cake.

If the stock takes out Tuesday's low (currently at $14.55), then it’s possible the stock has a fifth wave lower, which would put the March low in play at $11.07. 

Should we see significantly more weakness - such a close below the March low - that would potentially put the 200-day moving average on the table, although it’s still a long ways away. 

Jim Cramer Prefers Plug Power Over FuelCell Stock