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Lithium stocks were destroyed over the last few weeks.
However, it looks like the pullback is overdone.
For one, according to SQM, it’s “confident that the boom in electric vehicle (EV) sales will be a crucial driver of global demand for the soft white metal. Electric vehicle sales worldwide are expected to rise by around 30% this year, while lithium demand will increase 20%, the company forecast in its 1H23 results report,” as noted by CNAmericas.com.
Two, Albemarle expects to see higher lithium prices and supply tightness. In fact, on its second-quarter earnings call, CEO J. Kent Masters said, “Customers are returning to the spot market after destocking to unsustainably low levels of inventory against the backdrop of growing demand, with lithium inventories decreasing in the supply chain over the last few months.”
Three, according to a Seeking Alpha article, “Supply constraints may also be a major driver for pricing... Lithium production from existing mines is expected to flat after 2025, while the contributions from new mines are also minimal, as the sector remains under-invested.”
That being said, investors may want to push back into oversold lithium stocks, such as:
Albemarle (ALB)
ALB has become ridiculously oversold at major support. It’s also over-extended on RSI, MACD, and Williams’ %R at the moment. From its current price of $189.74, we’d like to see the stock initially rally back to $213 a share.
Imagine that you are an event trader and all the conditions for a Green Alert Day have been met. Day after day, sellers have dominated in the trading action, driving the market to greatly oversold levels. Recent economic indicators have been negative, which means the economy is crawling along. The only positive for the market is that, at the moment, tensions around the world have subsided. There is no nagging uncertainty to keep investors at the sidelines.
Now imagine that before the bell, Microsoft announces spectacular earnings and says its future earnings appear strong as well. A Green Alert day might unfold before your eyes. The market is oversold and there are no prevailing conflicts or uncertainties. The market will very likely go up, perhaps way up. It is time for you to act, to jump into an index call option.
Green Alert Days
When the conditions necessary to create an Upside Green Alert Day occur, don’t hold back. Take the risk with Nasdaq 100 contracts. To make the most of the leverage provided by options, buy as many Nasdaq 100 contracts as you can afford.
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