Long Term ICLN investment

2021年12月9日

I believe that renewable energies are the inescapable final destination for all of humanity, as even the oil industry knows that fossil fuel deposits are finite. To me, the renewable energy revolution has always been a question to when not if. For example, over the past decade or so advancements in semiconductor processing and production methods has lead to a 500% decrease in the scalability cost of solar panels. At this link you can look at a plot of the cost per Kwh as a function of time:

rameznaam.com/2020/05/14/solars-future-is-insanely-cheap-2020/

The big deal here is simply that around 2019 solar panels crossed into a cost region where it is almost cheaper to create power per Kwh with solar vs fossil fuel. This critical threshold applies to other renewables like wind as well, which basically means we are at a turning point from a business perspective where clean energy production will simply be as or more profitable than fossil fuels.


People have been aware of this for years now, so this is nothing new and some clean energy funds are already doing very well. I didn't really have much interest in investing over the past decade though, so as I prepare college funds for the future I'm really looking for the best value play when buying into a clean energy fund. I think ICLN could offer a lot of value relative to other more pricey clean energy funds based on the speculation that it has a lot of growth potential.

From a technical standpoint, the fund appears to be in a correction phase following a big run-up after the COVID drop back in March 2020.There is a 1D and 2D support at $21 that could be the bottom of a consolidation wedge given that the price action seems to show the 3 bear flags indictive of a completed wave A correction and shows good bullish divergence on the 13May21 low let. The 1D resistance at 23.55 could be the critical breakout point for this consolidation wedge:



On the larger 1W timeframe the price action can also be interpreted as a large Cup and Handle pattern. This timeframe also shows the average volume has never been net negative and both the average volume and average volume derivative appear to have been in a sideways correction since around march of this year until now.



According to the Recognia Elliot wave detection algorithm, ICLN entered into wave 3 back in October of 2021 following the downward break from the 3rd bear flag (labeled with orange trend lines and the 3) and exceeded the 24.52 price target. In the period over this wave, the average volume shown in the middle bottom chart had a steady positive slope, hit an inflection point from net negative volume to net positive and had a strong positive sloped derivative (shown on the bottom most plot and implying the increasing average volume has a positive rate of change). Recognia does not offer analysis on super-cycle Elliot waves as these cycles are too dependent on macroeconomic forces, but given the dynamics of renewables worldwide I think ICLN could breakout form this consolidation as a continuation of a wave 3 super cycle.

My stop loss is set at 19.50 to allow for a little leeway at the critical $21 support, but also provide protection since there could be a lot more downside than anticipated. I will be DCAing into an increasing position size indefinitely with the goal of lowering my cost basis per share until a bottom has definitely been found or the stop loss is triggered.