AJM and the Lithium sector in general has reached a fork in the road, one chart in particular that I am going to post here speaks clearly to the juncture we've just recently arrived at.
I was thinking of putting this post up as much two weeks ago, but recent events on the markets have made there own poignant statements about where we now sit.
First an AJM chart, this is a 2 year chart with an important trend channel that began Nov - Dec 2017, the channel encapsulated the vast majority of AJM price action from the date of origin until early May this year.
What has followed since early May has appeared to be a consolidation and perhaps a "bottoming out". AJM had broken clear of that trend channel, which looked promising. Although, now with developments on global markets this week, the bottoming out call comes into question.
Also of note on the AJM chart is the horizontal support line, this line was important as it marked the low at the bottom of the S&P500 & Dow very late last year, and at the same time marked a 2 year low for AJM pricewise.
The support line has now become initial resistance for recovery from current price point.
The next chart is the LIT, as far as I know it is the largest and most liquid passive investment vehicle related to the lithium sector.
The trend channel that has encapsulated the vast majority of price action for getting close to 2 years now, is still controlling things (unfortunately).
I was recently becoming hopeful of a possible breakout, the shorter term LIT chart below shows a recent development which was looking promising.
Since early June LIT had been flirting with the red support line which I drew from the lows early this year (this LIT low followed the lows of S&P500 & Dow just a few days previous). So this flirtation with the red support/resistance line was quite anomolous, as there had been no similar price action anywhere since beginning of this trend channel.
This price action though (the nearly 2 month flirtation with the red support/resistance line), was at a time juncture which dictated a possible breakout or a subsequent price drop (a point in time where the upper purple trend line would intersect current price action as well as the red support line) - which of course has meant price action would continue to be controlled by this long term trend channel.
Of course I was hoping for something more positive than what has ensued, timing is a very interesting thing and as it has happened the latest salvo in the trade/currency war has for the time being put the kibosh on a chart development that I had been thinking was beginning to look interestingly good.
The last chart is an instrument that is based on global lithium pricing.
The current action is not great, however, as we know, the factories are coming and AJM are in a very good position, high grade spod fully taken. Ramp up is going very nicely and this commodity funk will turn up, I believe we will see a turn up in pricing going forward soonish - and certainly by early next year.
GLTAH
mc
AJM Price at posting:
9.9¢ Sentiment: Buy Disclosure: Held
