FuelCell Energy, Inc. (FCEL) develops and manufactures fuel cell power plants for electric power generation. This stock was one of the hot momentum names back during fuel-cell fervor in mid-2000. I wish I could say my motives for discussing the stock were somehow environmentally based in honor of Earth Day, but alas, that would be a lie. My motives are more Gordon Gekko than save the Gecko (not that I have anything against geckos). I am just looking for interesting opportunities in the market.

In a post last week, Bear Stearns, SunPower Corp, Solarfun Power Holdings Co, and Suntech Power Holdings are Market Leaders?, we discussed some of the stocks that were leading the market off its low and I said I would dig into some of those stocks. FuelCell made that list with a return of 45%. However, as discussed, not all of these stocks are ideal contrarian plays. After looking into FuelCell, I have to say that this situtation may be a bit too volatile for me. Check out the weekly chart...

Chart Courtesy of Thomson Financial

I have added two trendlines to the chart. The red line connects the mid-2006 and late-2007 highs. The green line connects the early-2007 lows with bottom that was hit last month. My point of this exercise was to highlight that it appears the stock is a downtrend, albeit a very wide and volatile one. I suppose that someone could argue the stock is just in a very sloppy range and could concede that. However, the overall point is that we have extreme volatility but little in the way of overall trend..

A check of the sentiment indicators shows perhaps part of the reason for the volatility. According to data from Thomson Financial, 25% of the stock's float is sold short. As noted last week, I view anything above 10% as being relatively high and a potential catalyst to exacerbate volatility.

This is the type of situation that can be appealing to nimble, short-term traders but your timing has to be good. Very good. If you bought this stock in mid-February you are back to flat after holding through a rough pullback. If you bought FCEL in mid-March, you are sitting on the type of gain mentioned earlier.

FuelCell Energy (the company) has a great story but for now the stock is just too unstable for me. I think this is still one to watch but I need to see some signs of price stability start to emerge.