OK, my last bullish call on ZBB Energy Corporation (NYSEMKT:ZBB) didn't work out so well. It looks like it was just too soon to expect a bounce from ZBB back on April 2nd when it was still in the shadow of a huge runup and a subsequent pullback. The dust has fully settled now, however, and most of the clues are now pointing in a bullish direction.
ZBB Energy is a power storage and a power management name that's found a market by serving the renewable energy and small-scale energy niche. It's been lumped in with similar plays like Plug Power Inc. (NASDAQ:PLUG) and Ballard Power Systems Inc. (NASDAQ:BLDP), and it's not an inappropriate comparison. Though much smaller than BLDP and PLUG, ZBB lives and dies by the same sword that Plug Power and Ballard Power Systems live and die by. There's one difference between ZBB Energy and its peers right now, however - ZBB is knocking on the door of a breakout.
The chart below tells the tale. Still feeling the weight of a wild gain in early March, ZBB just wasn't ready to recover in mid-March. In retrospect, we now know it was going to take a retreat all the way back to the all-important 200-day moving average line (green) to hit the reset button on the bullishness. After feeling around that level for a few days when April turned into May, the 200-day line finally became a pushoff point, sparking a new rally. In the meantime we've seen a steady string of higher highs and higher lows.
While the momentum is solid, there's one final line in the sand that ZBB Energy needs to cross before traders can feel fully comfortable about getting into a new position - the stock needs to clear the ceiling at $2.00. That resistance has been tested three times since mid-May (the third time being today). The fact that the bulls aren't giving up is a good sign that ZBB will eventually punch through... and probably soon. Once it does, we could see a repeat of the kind of crazy bullishness we saw in early March.
Is it fundamentally justified? No, probably not. The whole energy capture and self-sufficient energy production space has been more dependant on hype than results to keep its stocks propped up, and that's not changed much. That doesn't mean you can't rent ZBB for a quick ride up, however.
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