Did the odds of sector reversal increased this week?.
From a weekly perspective, PMT moved from 41 to 39. So a small drop on the weekly.
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So what is happening? Last 2 weeks I have been writing that Li sector seemed to be in a confused, with no strong direction, both up and down. This week very similar play, nearly. Last Friday Chinese Li stocks had a big gain, biggest for last week. Same this week. Ganfeng and Tinaqi were flying today. At one stage it looked like they would do the usual max limit of 10% for the day today. But then left it for another day. Still a very good day, both rising by over 6%. From a weekly perspective, again a very strong week for both, close to 10% gain on the week. So strong good signs from there. Now lets look at the other big factor important for reversal. ALB last week finished at 95.14. Yesterday it finished at 95.15. So flat till now, but should gain something tonight on another strong Chinese Li day. But still maybe well short of 10% gains that Chinese players made. So not bad, but not as good as the other. The good thing is, it has held this level. We were 72 in September. So still good. We need both, Chinese and US, for confirmation of reversal. They might not go in tandem, but as long as the lagging is catching up, rather than leading one falling behind, the reversal journey will be in play. So where are we now? I still feel that the bottom that we saw in early September, the reversal journey is still intact. We still don't have confirmation though. ALB above 106, Ganfeng above 37, and both staying above that. I feel that will be a very strong signal. But most stocks are still 20/50% above their lows, average between 30/35%. That is still very good. We didn't lose this week, in fact it was a decent week. So lets see.
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PMT too is playing the macro. Last week I had written that PMT is playing the macro, but is playing average. This week I felt it was weaker than average. Last week I had written, that on weakness it needs to hold 38. So surprise that it reached there, and for now, kit has held that. But work is cut out, especially if no support from macro.
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Personally for last 2 weeks I have been writing that I was getting out of Li sector. After watching the play early in this week, I felt I have to be in it. But I still haven't got a very strong signal, but a good signal. Also, the other sector where I play big, the Uranium sector, is in consolidation mode. That too is in flux which way it will go. This week Uranium sector played slightly weak, had a big gain recently, so looks to be in consolidation mode. So the sector play that I do, I am now two-thirds Uranium, one-third Lithium. I picked up a fair few Lithium stocks this week. Rest playing health, ree, gold etc.
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Last week I had written I had got out average 46 from my buy average 37. I picked up some PMT today, at average 39. Right where it close. More because I feel macro may change. One thing is PMT is hot and cold stocks. If sentiment changes, it could run hard. One of the reasons I always want PMT if things are looking like changing. I bought on that context, only bought half of what I had, so lets see.
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So what may happen next week? I feel we are in a much better situation than when I was writing last Friday. I felt last week, odds of going up or down was even, or even tilting towards going down. This week I feel odds tilt towards the upside. Lets hope we at least maintain this level. That itself will be positive. But there is a decent chance, that we keep moving up, even if its 2 step up, 1 down. Will that happen? Let's hope so. Enjoy your weekend and all the best
(20min delay)