It has been a while since I last posted a LTR chart with some comments as to where I see things at present. Below is a chart, not too different to the last one I posted. In my last chart (Post #:65238300) I had marked out three areas at which sell stops would naturally sit. These areas would naturally be areas to which major players would manipulate price to. In addition to this, I had marked out a minor level of consolidation circa 1.20. In my last post, I believed that price would have gravitated to the 1.40ish area, hit the sell stops and then possibly revert. This didn't happen. My bad.
P is now sitting at 1.23 and looking weak. I am now more inclined to think that P could gravitate to the previous low in June 2022, where we see an additional pool of possible sell stops. LTR P is also almost hitting the 0.786 fib level (from the June low to the Nov high). We can also see that P has smashed through the 200 day MA and has a way to go to reach the 200 week MA (red line).
What are some possible explanations for a 15 straight day decline in price. 1) Macro events driving the price of stocks on the share market 2) LTR is not a producer and therefore has no cashflow 3) Worries about the broader economy and its impacts on the construction phase of this project 4) Pure price manipulation within the Li market
Taking the first point - macro events
This could be broken into two main areas - geopolitics and economics
Within the geopolitics realm we have issues arising from Europe (Ukraine and Russia) and Asia (China). The major issue arising from these two areas of conflict is the disruption to supply chains - oil/gas (Europe) and manufactured goods (China). As a result of these disruptions, companies and governments are now actively looking at ways to re-shore or localise production. In the case of the oil and gas, Europe in particular is now looking to other parts of the world to shore up its energy needs (oil and gas) or is firing up coal fired power stations and nuclear facilities.
Re the economics question, this is most evident in supply chain issues, the price of goods (both input and final), the increase in i-rates as a policy response to increased inflation. Over the past few years there has also been a reduction in the workforce due to aging populations. This is impacting many countries (here is a link to a site looking at demographics https://www.populationpyramid.net/).
Graphically we can see this play out as follows.
The 2Yr/10Yr interest rate has inverted and is the greatest inversion since the 1980s. An inverted interest rate is an indicator of a recession in the near future. Macro analysts and economists are predicting a global recession sometime in 2023 (probably H1).
The Fed funds rate (price of money) is increasing and driving the price of retail interest rates up. This affects households (consumption) as well as companies (cost of capital). This will (eventually) depress economic demand for goods and services.
The priced of oil and gas (next two charts) increased substantially with the invasion of Ukraine, however, this is now in reverse with the effect of i-rates impacting demand. Also, the fear of the unknown re oil and gas has worked its way through the system somewhat as the war in the Ukraine has progressed.
Not only does oil and gas show the impact of the reduction in demand, copper also has a story to tell. Should it go up or should it go down?
The price of bonds tells us that the era of cheap money, for the time being, is over. The price of bonds have an inverse relationship to i-rates.
Now getting to Li side of the market. I have highlighted this chart before. We are about to break the lower bound envelope of the triangle and are heading to lows achieved in March 2021. The Li market is weak.
The REMX ETF further highlights this weakness within the Li sector at present. Basically a triple bottom. But there could be a turning point here. However, there is a lot of work to do to break the upper trendline and then put in a higher high. We wait an watch.
XLY/XLP shows the push and pull between discretionary spending and staples. At present people are not spending their hard earned on discretionary items (i.e. electric cars) they are spending their money on the basics of life - food, clothes, fuel, rent/mortgage, etc.
Now we get into three charts that tell different stories.
The first is the Dow Jones. It has put in a lower low and a higher high (just) and has now retraced somewhat. Is it going to drop further and put in a new lower low? I am undecided at this point. However, I probably lean to further retracement down before heading up to make a higher high.
The same cannot be said for the NDX. At this point in time, given the weakness of IT stocks the balance of probability is that the trend is headed lower.
The S&P on the other hand, given is is a mix of growth and staple stocks may defy gravity. The index is in a small balance area at present, but I mostly suspect that this is due to Xmas and therefore low volumes. We wait and watch....
Back to point 2) LTR in construction phase
Well this is inevitable, wouldn't you think? No income to speak of. The hope of catching the big prices that we have seen recently with Li (i.e. PLS spot prices). Also see the Li Futures as an example... This has seen a 137% increase in the price of Li since Jan 2022.
The table below shows PLS's spot price over time. There is a 221% increase in the spot price of Li between October 2021 and December 2022.
The question that has to be asked is, "Will LTR capture this increase in 18-24 months time?" At this time, this is the great unknown, given the potential weakness in the economy. How will this impact LTR in the long term? Probably not much at all given the transformation to a greener, cleaner world. This, of course, is always subject to the development disruptive technologies.
Project development at Kathleen Valley
Little is mentioned of this, however, as far as I am concerned this is a potential risk - predominantly with cost increases, labour shortages, weather events, execution delays. These events cannot be 100% controlled, no matter how much additional time is placed into the critical path of a project plan or additional financial contingency is allocated within a budget. Risk is risk and the market will look for any excuse to mark a company down for both perceived and actual risk.
I come to my last point - pure price manipulation....
Well all of the above, I suppose, can be used by the smart money/composite operator/BEOT to manipulate price to whatever level they want. As retail traders, we have very little that we can do about that. We just don't have the $ to counter their buying/selling activities. However, I don't necessarily see that as a negative. If the business that you are invested in is a fundamentally good business with significant upside potential, then lower prices are a good time to accumulate. After all, isn't that what the hedge funds, superannuation funds other investment houses are doing?
Many LT holders on this forum, from what I read, take advantage of these periods of lower prices - all thanks to "price manipulation".
Someone recently said that they were trying to highlight what was happening to LTR because of the value destruction that is being experience by some. I would have thought that the person who made that statement should have put a caveat that stipulated that they were speaking to the stock holder who invested in LTR 2 months ago and who has to sell now. They have lost money. LT holders on the other hand have not "lost" money. That would have been a paper loss only. That person is predominantly interested in shorter-term investment time horizons.
Another question that has recently been brought up is in the line of, what is the catalyst for a reversal of the current downward trajectory of LTR's stock price? Well, my view on that is that until we see a change in macro events in the near to medium term, then the price of the stock will remain in a trading range - it won't go much higher that the 2.20/2.50 and it may trade down to the previous low 0.88. If this is the case, then for short-term and long-term investors, opportunities abound - trade or accumulate. Take your pick.
I will leave this post will one last chart which is that if TSLA. As can be seen from this chart TSLA is currently nosediving to a price below 100USD per share. IMO I believe that this stock will break significantly below $100 if it can't hold at that price. From what I read there is just too much negative sentiment for this stock at present. The question that has to be asked is, "What does a lower TSLA stock price do for the EV market in general?" I ask this question because Musk and TSLA have been synonymous with EVs and by association the Li market in general. What will be the impact for the Li market from a fall from grace by Elon and TSLA? NOTE - broke the 200 day MA as well as the 200 week MA.
All of the above is my opinion only. Please do your own research, understand your risk tolerance and never invest more than you are willing to loose.
LTR Price at posting:
$1.23 Sentiment: None Disclosure: Held
(20min delay)