Which path will WC8 take - yesterday's or today's?.
From a weekly perspective, WC8 remained flat at 22.5, volume usual, except today which was decent.
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So what is happening in WC8? Playing extremely weak. Till yesterday. Suddenly got some new life today. Can that be sustained?
Looking at 3 major major factors in play- Li macros - This is in decline. All jurisdictions in decline for last few weeks
- ASX Li play - ASX Li stocks were in clear divergence before, now that divergence is getting narrower. Unfortunately, not by the path that ASX Li stocks are gaining and bridging the gap, but US/Chinese Li stocks dropping big time
- WC8 Play - For WC8, it needs a suitor like PMT, otherwise it may just follow macro, play like other ASX Li stocks
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WC8 play is weak. It is just following the Li macro, the ASX Li macro, and playing weak. From a numbers perspective, it looked very vulnerable and reached 19 yesterday, close to its 52 week low of 18.5. Today was different. As if someone has given a licence - just go and buy, some news is coming. Not sure though. As I have written many times, WC8 is a hot and cold stock. Although it was strong today, but still didn't close above last week. So still a lot of work to do, for guys who have given orders to buy.
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Last few weeks I have been talking how ASX stocks (Li/U ) playing weak compared to other jurisdictions. The good play, of ASX gaining has not happened. ALB has now dropped over 20% from its recent high of 113.91. Ganfeng has now dropped over 20% from its recent high of 45.30. Both looking very vulnerable, and more importantly at a very critical juncture. If they continue to drop, it will be another calamity for ASX Li stocks - new lows will be made. Nearly most ASX Li stocks have made a new 52 week low in recent times. That play may continue. So what can stem that rot? Both ALB and Ganfeng need to hold here. In a blink ALB can drop below 80, and Ganfeng can get to around 30. Big stocks like PLS/LTR etc making new 52 week lows, and dragging a lot of other LI stocks in making 52 week lows.
So what play should we expect for any positivity?
- ALB - first level is 92/94. It needs to go there, soon, maybe tonight, or at least close to it. That will be 30% from its lows. But more importantly, that was a well traded zone which ALB held very well before. Then only it went to 113. But this week, already down over 10% with play pending for tonight.
- Ganfeng - first level is around 38, it needs to get to around 38. It is still doing well. But around 38 will mark around 50% up from its lows. That will be positive and keep the hope alive. Ganfeng down around 3% for the week. So not a very bad play, the best hope at this stage.
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Personally, last week I had written that I had got out of most of my Li stocks, those that I picked 2 weeks back. Early this week I exited most. Last week I had exited most at break even, this week a small loss. WC8 last week I had written I had done some plays and had my average in mid 20s. I picked up some at average 20, so have brought down the average to 24. Lets see. Regarding other Li stocks, I don't know, today again I felt that there may be a bounce in sector - 50/50 chance. Have taken a punt and bought a fair few Li stocks today. But have only bought one-third of what I want to buy. Will see ALB play tonight. If its in red, I may exit on Monday, break-even/slight loss. But if its green and regains 92/94 level, I may add another one-third soon.
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So what may happen next week? Very uncertain state. Very concerning as well. It needs to hold here. Otherwise big trouble. No Santa rally till now, instead going in opposite direction. But things can change. I feel we are vey close to the bottom of this phase. But best not to assume anything. Follow price action. The good time could start with ALB gaining 92/94 level tonight. Will that happen? Lets hope so. Enjoy your weekend and all the best
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