Is the pullback done?.
Yes LRS gained 0.5c to finish at 21.5, volume was moderate, just over 12m shares traded.
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Yesterday US Li stocks continued the weakness from previous day. ALB big raise dampened the sentiment. There was a back test/consolidation that had started, and the news around ALB accelerated that. US markets also did not do well. SP 500 fell around 1%. ALB did a new 52 week low around 106, beating its previous 108. Other US Li stocks too in a big fall, average drop 8%. Yesterday I had written how SQM had risen from 40 to 51 without any hinderance, which in rise is good, but does not create support levels when falling down. So I think we saw that steep drop. SQM now at 44 level. Spot price is still favourable, so lets see.
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So why are the Li stocks suddenly looking weak and punters are once again anxious? Many may have anticipated some back test/consolidation/small profit taking to happen. So no surprise from that perspective. But two things may have surprised punters. One ALB raise. Second, sudden drop. As I had been writing, for two weeks Li stocks were rising, most gained over 25% in this phase, many around 40%, so a correction was due. On the weekend it was still looking very rosy, but in the Weekly Report I felt I need to write this as some drop may come - " One thing I keep on repeating is that it will not go in a straight line, but as long as we keep moving up, more than down, it will became huge". Also on Monday (other threads) I was talking about the lower levels of ALB, 135 etc, rather than the upside. Again thinking about weakness in the immediate than strength. What may still be surprising is the rate of the drop - many may have thought it may be gradual.
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ASX Li stocks also started in panic mode after what happened yesterday in US Li stocks. A decent drop across most Li stocks. But then many punters got in. Many ASX Li stocks still finished in red, but the drop was much smaller, and most finished towards the high of the day than the low of the day. So why was that? As I had said above and wrote on weekend, " One thing I keep on repeating is that it will not go in a straight line, but as long as we keep moving up, more than down, it will became huge.". So unless there is a massive failure, there is a good chance that most stocks may do a higher low from their previous lows. Usually around 20% drop, many feel, that may be it - we may have seen the correction. Many stocks dropped around 20%, where most of the buy started. If that theory holds, that this is a back test/consolidation, many took this as an opportunity and sign - to buy the dip. It is still possible that we could drop more, but suddenly the odds from the 20% drop are better for buyers. So no surprise there as well. But we still have to see if that was a good move or more pain to come. Overall if we reverse from today's lows, it may still be quite positive. I am playing that way. But I could be wrong, so please dyor and check risk/reward.
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LRS too played the wider markets overall. But in terms of recovery, a much better one to finish in green. It rebounded very well from the key level of 19.5. So for now it has maintained the playing field of this recovery between 20/24 - lets see if it can hold.
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Personally I was a buyer today for LRS and many other Li stocks. My buy at 19.5 did not get hit. So I picked up one lot at 20 just in case. It did not come back. My average before today was 19 for this phase, now just over 19.
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So what may happen tomorrow? Li punters once again anxious. There was a slight euphoria building among Li punters as I wrote on the Weekly Report. Similar thing in U stocks couple of months back. So a small reality check. From here its difficult to predict. One path, the bad path, is that Li stocks continue their slide for some more time before finding a bottom of this phase. Will it go below the Feb 6th (and around) lows made by many stocks? The odds are that it may not happen. Many stocks are still quite ahead as of now, but some more easing could happen. The other path is the good path. It was the pullback we had to have. Many have done around the regulatory 20%. Its time to resume back the up journey. Will that happen? Lets hope so. All the best.
(20min delay)