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Technical and Fundamental Analysis on Lithium

Most associate lithium with EV usage.

The largest holding in the ETF basket (LIT) is Albemarle Corp. (ALB). The U.S.-based company is not purely a lithium business, as they also produce chemicals related to petroleum refining and consumer electronics. Interestingly, Tesla is a holding in LIT as well as ALB, only with about ½ the percentage of weight.

Factoid: Lithium, the drug, is made from lithium, the metal.

Besides the use for EVs, lithium-ion batteries are the key to rechargeable power for laptops, phones and other digital devices.

Expectations for longer-term demand supports a rebound as government incentives to switch to EVs. Some forecast that lithium demand by 2040 will be 16 times higher than present-day levels.

Is LIT a buy?

On the daily chart, the 200-DMA is above the 50-DMA and the price is in between. That is a recuperation phase or one of hope. The slopes on both MAs are slightly negative, but not by too much. I particularly like the risk right now. The low of the day LIT cleared, the 50-DMA or 60.90, should hold.

On the Real Motion Indicator, there is a bullish divergence. The momentum is above the 200-DMA, while the price is still quite far. That is typically bullish for the instrument.

On Tuesday, May 16th, LIT is having an inside trading day, or trading within the range of Monday. That means pause or uncertainty. We will be looking for a weekly close around or just above current price levels, as patience is the key in current conditions.

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ETF Summary

S&P 500 (SPY): 23-month MA 420; support 410, then 405.Russell 2000 (IWM): 170 support, 180 resistance.Dow (DIA): 328 big support to hold.Nasdaq (QQQ): 329 the 23-month MA and big caps trying hard.Regional banks (KRE): 42 now pivotal resistance-holding last Thurs low.Semiconductors (SMH): 23-month MA at 124–can it hold next 2 weeks?Transportation (IYT): 202-240 biggest range to watch.Biotechnology (IBB): 121-135 range to watch from monthly charts.Retail (XRT): 56-75 trading range to break one way or another.

Mish Schneider

Director of Trading Research and Education

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