Generally, the alternative energy and solar sectors tend to do less well when the economy is slow. This is mainly because oil-based energy is cheaper and less in demand, so people aren’t as inclined to care about alternatives.

We all remember when oil hit $140 per barrel — solar, wind power, and other alternative-energy companies became the darlings of the investment community, as there was a need to replace oil as a main source of energy.

For our standpoint, we closely track the publicly traded solar and alternative-energy plays and their inverse correlation to oil prices.

For example, Clean Energy Fuels (CLNE), U.S. financier T. Boone Pickens’ project, is currently in a technical Downtrend according to our models. PV companies (they make the photovoltaic cells) Yingli Green Energy (YGE) and Suntech Power (STP) are also in technical Downtrends, as so much capacity was built during the time of high-priced oil that there has been recent oversupply and pricing pressure.

Yet there are pockets of success. LDK Solar (LDK), for example, is also a solar-related company, but makes the raw goods PV companies need. That’s a more valuable resource, and we see that stock still in a technical Uptrend. We called it in late July at $6.50 and the stock is now at $8.60 — a huge gain. We had a similarly strong call on Solarfun Power (SOLF), which is in that same business but based in China.

The solar business is hugely dependent on government subsidy currently, with Germany leading the world in terms of promoting the buildout of solar parks.

Similarly, we expect biofuels like ethanol to continue to need government help until costs come down. Brazil is managing to do it, but the U.S. still panders to corn farmers (Iowa is important when running for office), keeping ethanol prices a bit artificial.

But it will take a government mandate for the U.S. infrastructure to get to a point where gas pumps and vehicles can use gasoline that contains a higher amount of ethanol, or even allow for alternatives like hydrogen. At this point, the scope is too large for the private sector to handle on its own.