This week, the bears are running wild on Wall Street. Crude oil sets a new high. The U.S. dollar makes a fresh low. And Dow 14,000 is a nice memory. For the week ending Thursday, Nov. 8, the Dow Jones Industrial Average shed 2.13% and the S&P 500 shrank 2.16%. With the Writers Guild of America out on strike, who's left to cheer us up?
Newly written comedies may be hard to find, but I recommend a rerun of the Monty Python movie
Life of Brian
. I am reminded of the
scene where the Python troupe is being crucified while singing "Always look on the bright side of life."
Two stocks this week that are taking that advice are
. First Solar scorched the short-sellers, rising 44.47%, as its thin-film photovoltaic panels generated $46 million in third-quarter net income, 10 times that of third quarter 2006. The stock hit an all-time high of $230 a share on the news.
Solar energy's time has come. Governments in Spain, Germany and California provide monetary incentives that, when combined with ever higher crude oil prices, make the cost of solar power economically viable. Add to that half the U.S. states requiring more use of renewable energy, and you get double-digit demand for solar power.
Evergreen Solar, in position to capture that demand, ascended 44.18% to $15.99 for the period under review. The company is approaching profitability with expanded production runs and patent royalties from Thalheim, Germany-based EverQ. Shareholders who bought the stock for $14 in its IPO back in the tech frenzy of November 2000 are finally back into the green.
Both of these companies are holdings of the top two performing energy funds this week. The
Market Vectors Global Alternative Energy ETF
climbed 10.13%, and the
Calvert Global Alternative Energy Fund (CAEIX) moved up 7.29%.
The third-place fund,
Allianz RCM Global Resources Fund (RGLIX) held First Solar but not Evergreen. The fund did benefit from a 20.2% jump in
after the mining company rejected a takeover bid by
Betting on higher oil prices has been like shooting fish floating in a barrel of crude. West Texas Intermediate crude oil hit a record $97.61 per barrel on Wednesday. For the five trading days ending Thursday, Nov. 8, the "Texas tea" rose 2.11% to close at $95.46.
Over the same period, natural gas sold at Louisiana's Henry Hub deflated 2.59% to $6.78 per million British thermal units. Over the last two years, natural gas prices have been mostly range-bound, between $5 to $8 per million Btu, in comparison with the continuous upslope of crude.
The two funds most closely tied to natural gas prices took the brunt of the damage over the week ended Thursday. The
iPath Dow Jones-AIG Natural Gas Tot Ret Sub-Index ETN
lost 9.87%. This brand new exchange-traded note began trading on October 23 of this year.
United States Natural Gas Fund LP
, an exchange-traded fund, lost 9.72% tracking New York Mercantile Exchange futures contracts on Henry Hub, Louisiana natural gas.
For an explanation of our ratings, click
Domestically produced natural gas, being more difficult to transport than crude oil, is partially shielded from the ever-weakening U.S. dollar, unlike imported oil. This constrains natural gas prices to trading closer to supply and demand fundamentals.
Chairman Ben Bernanke testified about the economy in front of Congress this week. If you buy the outlook that fourth quarter economic growth will remain positive, this may increase the demand for energy. The alternative would be weak U.S. growth, encouraging the Fed to cut interest rates again. This would hurt the U.S. dollar and boost oil. Either way, the question is not if crude will top $100 but when.
Kevin Baker became the senior financial analyst for TSC Ratings upon the August 2006 acquisition of Weiss Ratings by TheStreet.com, covering mutual funds. He joined the Weiss Group in 1997 as a banking and brokerage analyst. In 1999, he created the Weiss Group's first ratings to gauge the level of risk in U.S. equities. Baker received a B.S. degree in management from Rensselaer Polytechnic Institute and an M.B.A. with a finance specialization from Nova Southeastern University.