Hi all, here's another scrum of scribbles for some infotainment.
It seems LTR is just one of many small ships being tossed around on unpredictable seas at the moment. Last week the AUD/USD had halted the down move and was chopping sideways, but this week after a small roll down on Monday an angry bear jumped out and smacked the Aussie Dollar down, and all the diggers along with it- I managed to record the event below. I enjoy listening to a few Macro podcasts and quite a few of them attribute a large part of the January rise as optimism around the China reopening, but a change in sentiment since the beginning of February as the market starting losing confidence. I'm not smart enough (or stupid enough to pretend) to understand all the reasons, but it's clear from this little snapshot, the NAAIM Index and various other market sentiment indicators, and the bi-polar way money is moving around that most of the market has no idea either!
As a side-note for those who also follow the yellow metal, look how Gold (and Silver) miners are the only two with a little up-tick on Friday. Gold has been acting as pretty much just a cross currency to the USD for a long time, but a drop in the DXY on Friday triggered an enthusiastic response for these two. Gold bugs must be absolutely stinging for it to finally start acting the way it traditionally "should" behave and have its time in the sun and are jumping in at the slightest opportunity.
But if sentiment towards miners and commodity currencies like the AUD is being negatively impacted by a slow China reopening, what do we make of the chart below? This chart posted by Alf at the MacroCompass only a week ago seems to indicate China's reopening is all systems go. So who knows- perhaps best to not let the musings of market gossip columnists confuse me too much!
And here's LTR compared to other Lithiums to compare how they've handled this turbulence since the end of January. You can see that if not for a nice spike from AGY at the beginning of February, and one from LTR the week before last, they would all be travelling in pretty much lock-step.
And focusing on LTR, here's a Weekly, Daily then 15 minute charts to illustrate a few things. The Weekly managed to register a Higher High but ended up closing down almost exactly on the Point of Control, the most traded price level of the past 20 month trading range. This weeks down bar was on high volume but was a relatively narrow spread bar, suggesting a hard fought battle between Supply and Demand. Although sellers had the upper hand by the end of the week, momentum sits at neutral levels and further price action is required to confirm a clear short term winner I think. The daily chart shows this battle a bit more clearly...
The Daily shows a classic pattern from a long time ago from a galaxy far far away. A pattern as old as the battle between good and evil itself- the bearish Vader set-up. I mentioned last week that after price got above the $1.68 level that it would have to contend with a proven area of supply which is highlighted by the blue volume shelf, and sure enough supply is still there. The first 4 days of the week were played out with dropping volume as a classic bull flag started to form, suggesting that most of the selling was driven by profit taking and positions being managed rather than a violent push down from shorters etc- Darth really wasn't following through with (the) force. But Fridays high volume, low closing down bar showed the empire striking back where there was some selling with intent, which can be seen more clearly on the 15 minute chart.
I liked the big nose Kilroy graphic that Flash used to emphasise the battle around the previous high of $1.68, so I plonked it in here as well. You can see on Friday how price was driven down methodically over the course of the day, but even so volume started to drop off until some high volume tidying of positions at the end of the day. I've drawn in a few divergences which happened to play out over the following day but I really don't give much weight to intraday divergences normally once the trading has finished for the day.
So in summary, both the Weekly and Daily chart finished slightly in favour of the bears, but the bulls are far from out of the fight. And depending on what surprises the wider market has in store for us, the coming week should be interesting.
(20min delay)