WC8 had its MRE - what's next?.
From a weekly perspective, WC8 had a small drop from 25.5 to 24. It played weak, volume usual. It tried to get over 27 this week, but could not sustain.
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So what is happening in WC8? As I mentioned, its playing weak. It broke thru its support levels and is now being tested
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There are three major factors in play- Li macros - This is overall in hold state or getting better in US and China.
- ASX Li play - ASX Li stocks are now diverging from major plays of other jurisdiction, like ALB (US), Ganfeng (China). Although they are holding or gainining, ASX Li stocks are declining. Not sure why.
- WC8 Play - MRE news was big. There was an attempt to have a big sell off, but WC8 has held for now. It looks like it will hold, I mean no extra sell off/gains due to MRE now, so maybe it will play how ASX Li is playing.
A combination of above 3 means its playing weak. How long will it play weak? ASX Li stocks have to close the divergence to plays of ALB/Ganfeng. And hope that they continue to hold or rise. ALB/Ganfeng are doing their job, but ASX Li stocks are not moving, maybe the risk appetite of ASX punters is different, and they may be more risk-averse, at least at this stage. That sentiment has to change. Till then we wait.
From numbers perspective, WC8 needs to hold here. If it falls, next big number is 21.5, next is 52 week low of 18.5. Upside, first to cross 27, then 29. But if it crosses 29, there is a good chance of a decent gain to be made. So lets see.
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Now looking at other 2 stocks I talk and track, use it for providing direction -
Last 4 weeks play -
- Ganfeng - 5% gain Week 1, 5% gain week 2, 5% gain week 3, and 2% gain week 4 - current week - so overall a great play
- ALB - 2% gain week 1, 3% gain week 2, 5% gain week 3, and holding the level, down 0.3% in 4th week, but tonight yet to play - so again a very good play
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ASX Li stocks comparatively, very poorly. They are dropping, in recent weeks and clear divergence now. In this period from 1st Nov, last 4 week play, PLS has dropped from 289 to 239 - a drop of around 18%. LTR dropped from 81 to 73, around 10%, But most drops happened in last 2 weeks. LTR has now dropped from 91 to 73, around 20%. PLS from 327 to 239 - a drop of 27%. Both Ganfeng and ALB have gained in this period, handsomely. So the difference is stark.
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So what may happen next week? A very concerning play happening now in ASX arena. I first saw this with ASX Uranium stocks where clear divergence started happening for several weeks. Unfortunately even after couple of months, it has not rectified. ASX Li divergence started couple of weeks back. Early days but no signs yet that divergence will close. We can only hope that ALB/Ganfeng and Li macro keeps improving, and ASX Li stocks finally remove the divergence. Then we can see a decent rise happening. Will that happen? Lets hope so. Enjoy your weekend and all the best
(20min delay)