By Kevin Kelleher
March 17, 2014

By Kevin Kelleher (@kpkelleher)

FORTUNE — It’s been five years since the stock market began to recover from the financial crisis, and the bull market shows few signs of slowing. But it is showing signs of erratic behavior. And the latest example for stock-market strangeness is a doozy: Plug Power (PLUG).

Plug Power is involved with fuel cells, an alternative-energy technology that promises clean energy. The company is based in Latham, N.Y., focusing on the niche market of fuel-cell-powered forklifts. Like many fuel-cell makers, Plug Power has proven better at burning through cash than delivering investor profits.

That hasn’t stopped some investors from speculating in Plug Power and other fuel-cell companies. Over the past six months, several companies — all with a history of losses — have surged: FuelCell Energy (FCEL) up 136%, ZBB Energy (ZBB) up 143%, Hydrogenics (HYGS) up 180%, Ballard Power (BLDP) up 274%.

None of those approach the rally in Plug Power, which has risen 982% in the past six months and 3,680% in the past year. And that’s after a roller-coaster period that saw the share price go from $6 a share 10 days ago to nearly $12 a share a week ago and back down to $6 a share at the close of last week.

Plug Power has become a battleground between short-sellers (short interest is 19.4 million shares) and speculators who don’t want the mania to end just yet. Although the stock is down sharply from its $12 high last week, it did manage to spike up Thursday after reporting 2013 revenue of $27 million and a loss of $63 million. Some investors were willing to buy a stock valued at 32 times its revenue last year. And that was after the company said it burned through $27 million in cash last year.

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Why should Plug Power mania matter to the broader stock market? After all, speculators have long flocked to small, money-losing companies with a product that one day, just maybe, could produce a huge hit. Tech stocks with an environmental angle are especially popular, since many investors understand the shiny promise better than the complex science involved or the daunting obstacles ahead.

And Plug Power is in many ways an ideal target for specuation. Founded in 1997, the company has a volatile history. Its share price rose as high as $1,500 in early 2000 and traded as low as 13 cents a share last year. In 2004, the company entered a $5 million settlement of a shareholder lawsuit alleging insider trading. The company has never even reported an annual profit, earning instead the dubious honor of 16 straight years in the red.

The trading in Plug Power bears another hallmark of a classic speculative rally run amok. Over the past 10 days, average volume has risen to an average of 129 million shares a day, well above the float of 88 million shares. On two separate days last week, every share of Plug Power available in the market was traded an average of three times a day.

Plug Power also has the appeal of a promised turnaround to spur investors on. On a conference call with analysts Thursday, CEO Andy Marsh said the company would post EBITDA of $3 million and that revenue would rise to $70 million from $20 million. But a scathing research report from Citron Research (which precipitated the plunge in Plug Power’s stock last week) chronicled the company’s history of overpromising on guidance.

Plug Power’s surge is worth noting for a couple of reasons. First, it’s far from alone. It’s not just other fuel-cell stocks either. There are warnings of mini-bubbles in Tesla (TSLA), in 3-D printer stocks, in biotech stocks, and of course in the Internet sector, where a little known company like Castlight can go public at 107 times revenue and then rise 149% on its first day. In fact, a bunch of seasoned money managers and observers are openly declaring U.S. stocks in general to be near or in a bubble.

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The Plug Power mania is also worrisome because the degree of insanity is unusual: Some observers said they’d never seen a mania quite like it. Also worrisome is it’s not just day traders investing in Plug Power but large-cap hedge funds and a few mutual funds as well. The company sold 10 million shares to a “single institutional investor” in January and another 4 million shares to such an investor in March.

All of this suggests not just a tolerance toward but also a growing appetite for deals that can’t even be rationalized. Speculation can spread like a fire into other stocks and sectors once investors see that there is a growing tolerance for irrational investing on a large scale.

Stock-market bubbles don’t emerge out of nowhere, they take years to build, starting with little pockets of speculation and scaling up to bigger stocks as everyone rushes to pile in before the music stops. They are like cancers that offer early warning signs before they spread.

The madness in Plug Power this month may offer all investors one such early warning. The company was a speculative boom and bust in 2000, and it’s starting to look like one now. History is repeating itself. Whether it does so in a few isolated sectors or on a much larger scale is something worth watching.

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