It was great to see last weeks ann., a fantastic outcome for AJM and a great reflection on the AJM management team. As I said earlier AJM were snookered by the JRO scenario, and to get to such a clear win - win outcome is about as good as you could wish for; in what was a long winded and challenging situation.
And at the same time a difficult market environment thrown in for good measure.
Unfortunately last weeks' ann. has coincided precisely with another downturn in the major US indices and LIT, and of course as has been written here - we would have also have also been expecting some AJM short covering. So the short covering was expected but the broader market downturn was in-opportune, it seems to be difficult for AJM to get a fair bang for buck with any of the very good progress they have made in recent times.
It has been a challenging year but I still see a very good future for AJM going forward. So a couple of LIT charts to give a clear picture of the broader lithium situation, the first is a long term chart (with weekly bars) going back to LITs' inception in mid 2010. This chart shows support at the most recent lows, this support line goes back quite a number years with several touches all the way back to late 2012, this line has attracted a number of touches at important highs and lows. I think it is an important line, I really don't want to see it broken:
The second chart is a much shorter time frame (nearly 12 months) with daily bars, the overhead downtrend line has been governing (resisting) price action for nearly the last 7 months. Recently I got a little excited about a break above the downtrend line in Sept, but the breakout was short lived and LIT then dropped down to new 16 month lows. But now LIT has pushed up through the trendline again, and then it did fall with some bad price action Wall St on last Fri & Mon, but has managed 2 green days Tues & Wed despite more falls on Wall St. I take it as a good sign that LIT is pushing up again, but it does have a lot of work to do. I live in hope.
Immediately I would like to see LIT push above the most recent high @$32.45, overall however, broader market outcomes will most likely be reflected in LITs' pricing. Having said that, the metals complex has taken a hammering since mid Jan this year, but I am bullish on Cu, Ni, Zn, Al going forward, on a fundamental and technical basis, I am looking for an upturn there in the short term (next few months), my hope is that they are bottoming out at present.. The contract price for lithium is still good (AJM would be expecting prices in the upper band of the off-take pricing scale) and this very much flies in the face of LITs' pricing, that in itself does raise some big questions.
I am not big on conspiracy theories but I also believe that lithiums and cobalts are seeing serious accumulation by larger market players, as the retailers have been capitulating., but anyone with a medium term market outlook will know that getting into the "right" lithiums and cobalt/nickels will be very rewarding over next few years.
I am beginning to feel like we are now getting to capitulation levels in the materials sector on the ASX and in the base metals and hopefully the same with LIT. So am expecting to see some sustained upward price pressure in the not too distant future in LIT, but first LIT needs to push up through $32.45 - that is the current line in the sand for me on the upside and the down side line was mentioned earlier.
