What happened 

Shares of oil and alternative fuel stocks took a nosedive on Monday as the market sank and oil tumbled. Three of the most notable moves were Clean Energy Fuels (NASDAQ:CLNE) dropping as much as 14.9%, Pacific Ethanol (NASDAQ:ALTO) falling up to 19.1%, and Transocean (NYSE:RIG) plunging 17.8%. Shares of the stocks were down 10.5%, 7%, and 9.4%, respectively. 

The energy sell-off was broad-based, and these companies are a great example of that. They serve oil, natural gas, and ethanol to customers, and a decline in commodity prices can be blamed for the sell-off overall. 

Chalkboard showing chart that rises and then falls sharply

Image source: Getty Images.

So what

There are a few factors to consider today, and none of them should change your fundamental investment thesis in these stocks. The first is that the market overall is down, and high-volatility stocks like Clean Energy Fuels, Pacific Ethanol, and Transocean will often exaggerate the market's move. As I'm writing, the Dow Jones Industrial Average is down 1.1% and the S&P 500 is down 0.6%; it doesn't seem like much, but when combined with the drop in oil, it can be a big hit to volatile stocks

On the commodity side of the market, WTI oil traded as much as 2.4% lower in trading today and is down 1.4% as I'm writing. Obviously, oil falling affects an oil stock like Transocean, but fuel companies like Clean Energy Fuels and Pacific Ethanol often trade along with oil because it's a competing energy source.

Energy stocks can be volatile. And when the market takes a turn, the volatile segment of energy stocks can drop quickly. That's what we're seeing today, not a real news-driven drop that you might expect. 

Now what

Let's put a few things into perspective when looking at today's move. One is that all three of these stocks are still trading higher than they were two weeks ago. So even backing out a little bit, they're still moving higher.  

RIG Chart

RIG data by YCharts

The other thing is that none of these three stocks could be considered sustainably profitable. Pacific Ethanol and Transocean have lost money over the past year, and Clean Energy Fuels is barely profitable. 

Put all of this together, and I would chalk today's moves up to normal volatility in energy markets. The move is partly a pullback from recent gains and partly due to the market overall selling off energy stocks. 

What I wouldn't do is take a day like today and change your long-term investment thesis. These companies haven't fundamentally changed, and long term this will be a blip on each stock's chart. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.