I must admit that I am an alternative energy junkie.  I love all things alternative:  I love the almost infinite variety of wind, solar, biofuel, CO2 to gas technologies that are out there.  Each one of them is exciting on its own merits and each has a claim to be “The One” that makes it to the next level.  Could RZ be one of the winners?

Raser Technologies, Inc. (RZ – NYSE) is (from RZ’s website) an environmental energy technology company focused on geothermal power development and technology licensing.

RZ has two divisions:

1. Raser’s Power Systems segment is seeking to develop clean, renewable geothermal electric power plants and bottom-cycling operations, incorporating licensed heat transfer technology.
2. Raser’s Transportation and Industrial segment focuses on extended-range plug-in-hybrid vehicle solutions and using Raser’s award-winning Symetron™ technology to improve the torque density and efficiency of the electric motors and drive systems used in electric and hybrid-electric vehicle powertrains and industrial applications.

RZ is making only nominal revenues with large losses every quarter.  Looking through their website, press releases and 3rd party articles on them is impressive.  They really appear to have some great technology and prospects.  The Evergreen Clean Energy LLC joint venture seems to hold great promise.  Read the release here.  Evergreen, a newly-formed alternative energy fund, has agreed to fund several RZ geothermal projects in the U.S. The recent news of the appointment of a new CEO, Nick Goodman, didn’t do much for the stock,  Mr. Goodman seems to have a solid resume and could be just the guy that the company needs….time will tell.

But, since we live in the real world, let’s talk RZ as it stands right now.  RZ has, according to its own balance sheet, maybe two quarters of life left based upon the present cash burn.  The liquidity ratios stink and the company has a great deal of debt (more than it can comfortably service along with huge R & D expenses each Q).

The chart, on its face, doesn’t offer much hope either. The prolonged bearish slide doesn’t appear to be slackening.  Or does it? Candlestick chart analysis gives us some insight into the chart.  Most of the sticks during this decline were long bodies or Maurbozo’s (in a declining chart, that means that sellers ruled).  Buyers put little resistance and the stock was bid down every day significantly.  Except, that is, for the last two days.  We are actually seeing tails develop on the candles which means that buyers and sellers are struggling over the stock.  In fact, yesterday’s candle shows that the sellers drove it down, but the sellers brought it back up to close near the top of its trading range.  The key for RZ is to watch for confirmation that the sellers are getting “exhausted” and that the buyers are coming back in. The oversold stochastics is an important indicator, but until the MACD intensity diminishes, the stock could continue to fall.

Here is my annotated chart:

Any good news could really send this one soaring.  I recommend that traders watch this one and keep it on the radar.  Technology-wise, RZ appears to be a “good horse to back”.  If they can get some financing for general operations and if the Evergreen deal comes through, this could be a HUGE winner.

Lots of variables, though…..

Good luck and good trading,

Jeffrey Dean