Have commodities really bottomed? [ENPH]

It is my high level view that commodities have gotten so slammed over the past few years that any purchase made at current levels will be a big winner in 18 months.  All I'm trying to do now is to catch the exact bottom for sport.  I have been building a non-traded commodities portfolio for several weeks now.  Yes there will be volatility but by showing discipline and not having to buy everything all at once I have offset some of the losses on some of my prior (read "too early") purchases in this non-traded category with nearer term winners like PLUG and YGE.  When energy prices bottom, so will alternative energy and all things energy related. 

So today I am looking at Enphase energy, a once Wall St darling that makes inverters for solar panels.  I have installed and been using their M215 microinverters on my personal 15.3 kW solar array.  It has been fully operational for about a year now and I'm happy to report that it's been trouble free.  I really like the microinverter approach because there are no high current DC links in it and also because I can monitor each individual panel/inverter combo.  With string inverters the DC levels run from 400-600 VDC and you never really know what is going on at the individual panel level.  The M215 is a very well built embedded device, very solid construction.  Of course, none of that matters immediately to the share price.

I just checked and ENPH is not overly indebted which is a good thing.  It sets them up for rapid growth when energy prices (and therefore the market value and perception of solar) reverse back upwards again.  And it WILL head back up because solar power is very nice.  It's clean, quiet, low maintenance.  You don't have pistons, bearings, oil to change, etc.  The panels are rated at 80% of stated output for 25 years even though a DIY-assisted installation like mine will be paid off in ~7.5 years at current electricity prices.  But electricity will not stay at current prices forever, not with competitive global devaluation of fake paper money.  First the deflation must play out but when that is over we will see massive inflation even in the US.



From an EW perspective, the bottom could have been put in at the start of Oct (5' and C') but the conservative play would be to assume that 1 of 5 of C is in wave 4.  However a jail break of the top rail should put us all on the alert that the bottom is likely in.




Given the degree this has retraced its recent peak, it could be counted as a deep vee second.  As long as 5 waves down have not been counted, this could still be a-b-c into that deep vee 2 and I do think such an outcome would take most by surprise.  The first real indication that this is the case would be a break out of the 4.40 level within the blue circle.  If however it begins to follow the red path to a lower low and then does 3 small waves back to current levels, look out below for the bottom to arrive in the $2 range per the red path.

Zooming down into the 10 minute chart we can see that so far only 3 waves down have been put in since the 9th of Oct.  The current sideways movement counts, so far, as a likely HT4.  But again the angles are severe and so it calls this into question.   So the 3 main likely paths that I see playing out from here are in red green and blue below, in that order of likely occurrence.

Red says that 1 of 5 will finish, move back up into 2 of 5 and then collapse off a cliff into 3 of 5, 4 of 5 and then finally 5 of 5 in the $2 range.   A break below the pink horizontal says that blue 5 is in progress.

Green says that blue 5 will finish with 5 more small red waves down, but that it will be treated as the entire 5th wave instead of just 1 of 5.

Blue says that move down will not go to a lower low and thus blue 3 per below will be treated as C of 2 of a new bull market. 

One way to play aggressive-smart would be to buy the open on Monday as long as/IFF it holds the recent low and then set stops at the pink line.  If stopped out then look for the next entry point in the $3.50 range in the hopes of at least capturing 35 cents in 3 waves up (sounds like not much but that's 10% folks) and then bail out and see if it will do 5 up instead of 3.  If 5 up then wait until it comes back in 3 waves.  Note that it will almost certainly take some kind of a 3rd wave to break out that falling blue line so if you see gap above it, etc. that's a buy the dip signal (never chase peaks!).