18 hoursU.S. Could Release Even more Oil From Strategic Stockpiles
19 hoursRussia’s Oil Production Jumps By 5% In June
20 hoursGermany’s Energy Crisis Could Worsen Amid Low Wind Power Output
20 hoursIndia Sets Sights On Deepwater Basin In Oil Exploration Push
21 hoursShell Warns Of Prelude LNG Disruptions
21 hoursUK Could Cut Gas Links To Europe If Severe Shortages Occur
24 hoursNorway Averts Oil Strike
2 daysOil Rises Further As API Reports Large Crude Draw
2 daysIEA: Europe Will Have To Cut Gas Usage By Nearly One-Third
2 daysU.S. Energy Employment Rises Despite Loss In Fossil Fuel Jobs
2 daysTensions Are Rising Ahead Of Xi-Biden Meeting
2 daysChinese Stocks Are On The Rise Following Unexpected Covid Shift
2 daysIran Looks To Join BRICS Group Of Russia And China
2 daysCanada May Expand Energy Infrastructure To Help Europe
2 daysU.S. Moves To Improve Relations With Oil-Rich Venezuela
2 daysIndia's Coal Crisis Is Far From Over
2 daysG7 Invites Oil Importers To Consider Price Cap On Russian Oil
2 daysFrance Says The Market Needs Iranian And Venezuelan Oil
3 daysCritical EIA Oil Inventory Data Sees Further Delays
3 daysRussia Looks To Lure Asian Buyers With Higher Quality Crude
3 daysThe Steel Market Is In Chaos As Demand Uncertainty Grows
3 daysA Bidding War Has Begun In The UK’s Struggling Energy Sector
3 daysOPEC+ Sees Oil Market Surplus Shrinking To 1 Million Bpd
3 daysLibya May Declare Force Majeure On Oil Exports From Several Ports
3 daysGermany, Italy Voice Support For More Fossil Fuel Investments Abroad
3 daysFrench Energy Companies Ask Customers To Use Less Gas
3 daysEcuador Could Completely Stop Pumping Oil Within 48 Hours
6 daysNew Regulations In Permian Could Deter Drilling
6 daysNigeria Says It Will Be Meeting OPEC+ Quota By August
6 days45% Of UK Drivers Cut Vehicle Journeys As Gasoline Prices Surge
6 daysExxon Calls For Higher Carbon Pricing
6 daysIndia's Russian Oil Imports Soar 50-Fold
6 daysGermany Considers Expropriating Nord Stream 2 For LNG Flows
6 daysCentrica Turns To Former Soldiers In Push Towards Net-Zero Ambitions
6 daysGranholm Meeting With Oil Refiners Ends With No Commitments
6 daysGermany Risks Industrial Crash With Gas Shortage
6 daysAugust OPEC+ Plans Will Likely Be Rubberstamped
6 daysNew EV Battery Boasts 1,000km Range
7 daysGunvor Can Deliver 13 Million Gallons Of Gasoline To U.S., But There's Catch
4 minutesThe Federal Reserve and Money...Aspects which are not widely known
8 minutesHow Far Have We Really Gotten With Alternative Energy
12 minutes What Russia has reached over three months diplomatic and military pressure on West ?
3 hoursGREEN NEW DEAL = BLIZZARD OF LIES
6 daysCoincidence of EIA Report Delay? - "I had seen it delayed minutes, and a couple of times a few hours, but don’t recall something like this — do others?" asks Javier Blas
4 daysEuropean Parliament Members, Cristian Terhes et al, push back against Totalitarian Digital ID and Carbon Tyranny in Europe.
22 hoursOil Stocks, Market Direction, Bitcoin, Minerals, Gold, Silver - Technical Trading <--- Chris Vermeulen & Gareth Soloway weigh in
3 days"How Long Will The Epic Rally In Energy Stocks Last?" by Tsvetana Paraskova at OILPRICE.COM
6 days"...too many politicians believe things that aren’t true." says Robert Rapier
7 daysDemonising fossil fuels has caused major grid problem in Australia
6 daysWelcome to Technocracy - The New World Energy Order... "1000s Of Sydney Homes Plunged Into Darkness As Aussie 'Price Cap' Policy Sparks Energy Shortage"
8 days"How to Calculate Your Individual ESG Score to ensure that your Digital ID 'benefits' and money are accessible"
There is very little I love more than a contrarian trade with a great risk/reward ratio. There is something satisfying about opposing conventional wisdom and being right, and when you can do so while risking minimal losses, it always grabs my attention. That is why I am looking at a trade in the ever so unpopular, beaten-down lithium industry.
The long-term case for lithium stocks is obvious and hard to refute. Lithium-ion batteries have emerged as the clear winners in the battle to power EVs and, with that market set to explode before too long, demand for lithium will explode with it. The problem in the second half of this year, however, has been that, as usually happens when a trade is obvious and well-publicized, any value in lithium stocks disappeared as the hype mounted. Once they started to soar, it wasn’t long before momentum pushed them to the point where a correction was inevitable. That correction duly came last month, but now it is starting to look as if that correction itself is overdone. One lithium stock, in particular, looks worth nibbling at as it approaches an important support level.
Livent Corporation (LTHM) is a pure-play, American lithium company that was spun off from a general mining company in 2018. It crossed above the $22 level (blue line on the chart above) for the first time in August and, once it did, that became a support level that was tested multiple times before the stock really took off in October. As I said, though,…
There is very little I love more than a contrarian trade with a great risk/reward ratio. There is something satisfying about opposing conventional wisdom and being right, and when you can do so while risking minimal losses, it always grabs my attention. That is why I am looking at a trade in the ever so unpopular, beaten-down lithium industry.
The long-term case for lithium stocks is obvious and hard to refute. Lithium-ion batteries have emerged as the clear winners in the battle to power EVs and, with that market set to explode before too long, demand for lithium will explode with it. The problem in the second half of this year, however, has been that, as usually happens when a trade is obvious and well-publicized, any value in lithium stocks disappeared as the hype mounted. Once they started to soar, it wasn’t long before momentum pushed them to the point where a correction was inevitable. That correction duly came last month, but now it is starting to look as if that correction itself is overdone. One lithium stock, in particular, looks worth nibbling at as it approaches an important support level.
Livent Corporation (LTHM) is a pure-play, American lithium company that was spun off from a general mining company in 2018. It crossed above the $22 level (blue line on the chart above) for the first time in August and, once it did, that became a support level that was tested multiple times before the stock really took off in October. As I said, though, the enthusiasm for the stock was a bit overdone, and a pullback was coming. It came, and now that we are close enough to that $22 support to make it a viable level off which to set a stop, it looks like a good time to buy.
The chart, however, wasn’t the only thing that makes me think the drop may be nearly over. There are currently a lot of articles like this around, telling you that you should be selling LTHM. It points to current valuation metrics that have nothing to do with the prospects for the industry as a reason to take a trade that would have been a great idea six weeks ago, but that has now played out. Momentum-based analysts who cherry-pick data were, in a lot of cases, the ones telling you should have been buying just before the top so, if you will forgive my cynicism, the fact that they are now telling you to sell suggests to me that we are close to the bottom.
Of course, for a long-term trade like this, the contraindicator of a momentum analyst who comes late to the party and ignores the principal reason that a stock has value can only take you so far. Over the next few months, the attitude of the market towards growth stocks and risk, as well as the long-term prospects of the company, will decide LTHM’s fate. On both fronts, there is enough chance of a positive shift to make buying at these levels a reasonable trade.
Growth stocks and risk are out of vogue right now, as evidenced by the fact that the Nasdaq has led the recent declines in the market. However, these things are always cyclical, and if you look longer-term, small-cap consistently outperforms large-cap, and the Nasdaq consistently outperforms the Dow. Or, to put it another way, growth is king, and risk is rewarded over time.
Still, that inherent volatility has to be considered, which brings us back to the current level. Buying here with a stop at say, $21.70 would risk only around 7% of your initial investment on a trade that, if LTHM just returns to its levels of a couple of weeks ago, would return around 35%.
In reality, nothing about the long-term prospects of LTHM has changed from when the stock was thirty or forty percent above its current level. What has changed is the conventional wisdom around it and other industry stocks but, as any contrarian trader will tell you, that is actually a bullish signal. With a 1:5 risk/reward ratio on a trade right now, it is well worth paying attention to that signal and looking to buy LTHM before the bounce starts.
To access this exclusive content...
Select your membership level below
COMMUNITY MEMBERSHIP
(FREE)
Full access to the largest energy community on the web