I watch the list of latest percentage gainers and losers to see what's hot -- and what's not -- on Wall Street. And over the past four days, I've watched China Energy Savings Technology (NASDAQ:CESV) go from $4.00 last Wednesday to a high of $7.50 this Tuesday. What's happening here?

The company develops, manufacturers, and distributes energy-saving products for use in commercial and industrial settings in China. Despite the stock's recent moves, this business has not set Wall Street on fire, even with 11.4% year-over-year earnings growth and fat 26.1% margins. In fact, the stock has fallen from $28.28 last December to a recent low of $3.90 a share. Yikes.

What instead could have sent this stock skyward was an announcement in mid-September that the company plans to explore new business opportunities and technologies in response to the "world's growing global energy crisis." The company clearly stated that it intends to expand into alternative-energy areas such as fuel cells, solar power, and micro-hydrogen.

But with trailing annual revenue of $39.8 million and total cash of $24.6 million, it is easy to understand why the stock sank from mid-September's $7.00 range to last week's $4.00. With so little capital, how did the company plan to compete with the likes of General Electric (NYSE:GE), BP (NYSE:BP), Shell, and Ballard Power (NASDAQ:BLDP)? For that matter, how does it expect to compete against solar cell manufacturer SunPower (NASDAQ:SPWR), which, when its initial public offering was sold last week, was showered with $126.8 million in proceeds? The company has not made a presentation to explain how it plans to do that.

Here is where the story gets interesting. A research report that set a $13.75-per-share 12-month price target didn't lift the stock. Neither did the mid-October announcement that the company was going to distribute Emerson Electric's (NYSE:EMR) invertor products in China. The stock kept falling after a press release saying the company had a letter of intent to develop a patented "high-end nanotechnology" solar cell that has a "thermo-photovoltaic conversion rate of over 35%." Hmm. I thought some talk on nano and solar would've been worth a good bit more speculation.

No, not even an announcement a week later of a letter of intent covering a proton exchange membrane fuel cell was enough to ignite the stock.

So what exactly happened last Wednesday? There is no press release to explain it. There is no short interest squeeze when only 1% of the float is short. There is just a strong rise in daily volume and an ever higher stock price, with no apparent reason.

Let's just call this the "bottle rocket" effect. If you have ever deployed a bottle rocket on the Fourth of July, you hope it starts out going upward, but you know it can actually go in lots of different directions. But then the fuel runs out, and the projectile falls back to Earth.

The bottom line here is that China Energy is a speculation -- one that, after some passage of time, might leave the remaining shareholders asking, "How is this company going to fund all these alternative-energy initiatives?" For that matter, are any of these alternative-energy initiatives going to be worth anything if energy prices come back down to Earth? I'd say no.

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Fool contributor W.D. Crotty does not own any shares in the companies mentioned. Click here to see The Motley Fool's disclosure policy.