Gevo, Inc. (NASDAQ:GEVO) had appreciated by nearly 200% in just 2 sessions in the last week on the back of the news of the company entering a partnership with Alaska Air Group, Inc. (NYSE:ALK) to launch its alcohol based renewable jet fuel. After the company receives its ASTM international certification, Alaska Airlines will fly a demonstration flight in mid to late 2015, using Gevo’s biofuel. The news pushed the price of the stock from $2.50 levels to $7 though the last trading day saw a good bout of profit booking dragging the stock a bit lower.
Technically, Gevo, Inc. (NASDAQ:GEVO) enjoyed anything resembling to the bull market only for 3 months, just after its listing in early 2011. The rest of its existence has always been controlled by the bears. From the life time high of $395, it took only 6 months to drop down to $81 and then in a much more gradual decline, interrupted by occasional corrective bounces, it came to hit a low at $1.32 by early 2015. So any bounce back should be carefully assessed keeping the long term downtrend in mind.
The price action in the last 9-10 months shows a definite deceleration in the bearish momentum. The bounces have been getting faster and the declines have been taking a much longer time. Despite the sharp bounce last week, the series of lower highs and lower lows remains intact and that keeps the bears in control but if the bulls can manage a break above the Supply area in the band of $7-$9, then a further extension of the rally to $15 can be easily expected. The price action for the last few months is contained in a slightly slanted channel, as shown on the chart and that upper boundary can push the price down to $4 or even lower unless the bulls manage a breakout very soon.
