Still no direction for sector, drifting lower ?.
From a weekly perspective, PMT moved from 39 to 37.5. The drop was on a normal volume though. So nothing to read there.
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So what is happening? Its now 3 weeks I have been writing the same thing. The Li sector looks to be in a confused state, with no strong direction. Usually, in this type of scenario, when it lacks a strong momentum, stocks drift down. But its not a sell off, usually a slow decline. I feel that is what we saw for the Li sector this week. We are still playing a game of cat and mouse between Chinese Li stocks and US/ASX Li stocks. They have decided, for quite sometime now, in fact several weeks now, that they will not go in tandem. If one rises, other takes a breather. And vice versa. So we have not been able to get a very strong momentum for the Li sector. ALB made a big move couple of days this week, reached 99, but was not able to breach 100. Currently sitting at 94, last week 93, so not much of a play. Chinese stocks are doing the same. Big swings. Sometimes 5% gain on a day, or a loss. Or within a day rising and giving up. Both Ganfeng and Tianqui, around average 1% down for the week. So same play as ALB till now. This is clearly sign of consolidation. At this stage, no strong movement either side. I think we may have to wait.
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On the positive side, this looks like consolidation. Li stocks have risen 30/40% from their lows. I wrote last week I felt this was Phase 1. We have played that. Now we are waiting for Phase 2. Will that be another 30/40% rise from here, or we give it all back? We don't know. But at least the held is a good sign. Odds favour an upside even though it may not be immediate. On the negative side, if we don't make a move soon, stocks, which are drifting down, may continue to do so. So may become a bigger task even to cross the recent highs. So a work cut out. So we don't want to stay here in this state for too long. I think, for now we are fine. But another week or two, may bring in the slow decline. So lets hope we hold here and we move up slightly.
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PMT too is playing the macro. A lot of ASX Li stocks were feeling the confused state and drifting down. PMT too did the same. It has not lost it yet. But needs to hold here. It needs to hold 37, otherwise goes to 52 week low of 34.
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Personally, overall, last week I wrote that I was one third Li stock and two third Uranium, in terms of where I play the sector, not other individual stocks. I am still the same. But I did a lot of trading this week. Couple of days back I had nearly got out of all my holding in Li stocks, but bought back today. So my holding is the same, but I have been lucky to reduce my averages.
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Personally, for PMT, last week I had written how I had got out at 46 from my 37 play. But had also bought back, at average 39. Somehow I didn't get a great feel, both for PMT as well as sector. So I got out at break even at 39 from my buy last week. I want to see where macro is pushing, before jumping back again. Lets hope its soon.
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So what may happen next week? Chinese stocks were going great guns today, rising nearly 5%. It looked like they will give the US Li stocks the much needed thrust which they were waiting for. Opportunity for ALB to break 100 and get to 102. But slight chance to get above my number 106. I have been saying for several months now, ALB needs to get over 106 and stay above that, for reversal confirmation. It was looking good in first half in Chinese trade, but second half was a semi-disaster. Both Ganfeng and Tianqi gave away most of the gains in second half. They still finished green, but barely. So in one way killed that ALB 106. General markets too are in an iffy situation. They doing consolidation as well. That is not helping the cause. So a work cut out for tonight and for next week, especially with US elections. I don't have an opinion. I hope it plays out well. I will follow market. I know most are long-termers. We are in a better situation than 2 months, early September where most Li stocks made their 52 week lows. Lets hope we are in a even better situation after 2 months. In between, there may be noise, but should not deter long-term faith. Will that happen? Let's hope so. Enjoy your weekend and all the best
(20min delay)