This week’s stock analysis is Global X Lithium Battery Tech ETF (LIT).
The electric vehicle boom and the general public desiring greener energy has created a marketplace where lithium stocks have been explosive.
Legislators and regulators want far more Electrical Vehicles on the road.
There are now one million electric vehicles on the road in the United States. The biggest roadblock to deploying more electric vehicles is the lack of charging stations throughout the country.
Legislators have pledged to create new regulations allowing over 500,000 new charging stations on the road by the end of 2030.
So there appears to be a tremendous amount of demand for battery electric vehicles over the coming decade. However, for any of this to occur, the world must have more lithium.
Lithium is a good conductor of heat and electricity as well as a highly reactive element, though it is the least reactive of the alkali metals. The global market for the alkali metal lithium is growing rapidly. With 8 million tons, Chile has the world’s largest known lithium reserves. This puts the South American country ahead of Australia (2.7 million tons), Argentina (2 million tons) and China (1 million tons).
If you have been following any of the news on Tesla you will understand how important Lithium is towards to realization of cost effective Electric Vehicle battery production. Investors can explore this trend by looking at an ETF like LIT which invests in the full Lithium cycle from mining and refining the metal, through to battery production.
Let’s first start off with the common-sense metrics and an annual look at the chart of Global X Lithium Battery Tech ETF (LIT).
Over the last 52 weeks LIT has traded as low as 17.83 and as high as 72.50. This provides us with an annual trading range of 54.67. When we divide this value by 52 weeks we come up with an average weekly trading range of 1.05. This metric, on a very broad basis, only helps define what normal weekly stock movement is.
Using a.i. we look to capture many times that value during the time we are trading this particular asset.
We are advocates of becoming extremely aware, at all times of the 52 week trading range of any stock that we are looking to either trade or invest in. The 52 week high boundary often acts as major resistance to a stock advance until it is breached. Once a stock successful closes above its 52 week high, it is very common for a stock to continue to move higher. We do not take this on faith, but simply begin our analysis before this point, on 5/18/2020 when LIT first approached its 52 week high.
Please observe on the long-term chart above how the previous 52 week high acts as major resistance to LIT. Once LIT breached that price level it has gone on to move substantially higher in a very short period of time.
On March 31st, 2020 LIT closed at 21.71
Using the Vantagepoint A.I. Software traders were alerted that the ideal value zone on this uptrend was trying to purchase LIT at or below the predictive blue line on the chart. There were three trading sessions where traders could’ve purchased LIT between the price of $20.25 and $21.31.
Power traders use the predictive blue line in helping to determine both the value zone as well as the trend direction.
At the bottom of the chart is the Neural Network Indicator which predicts future strength and/or weakness in the market. When the Neural Net Indicator is green it communicates strength. When the Neural Net is Red it is forecasting short term weakness in the market.
On April 6th, the Neural Network turned GREEN and LIT exploded higher closing at $21.94.
During the time displayed on the chart below LIT moved $4.44 higher per share in a period of 21 trading sessions.
This shows the power of a short-term swing trading strategy for LIT which proved to be very profitable.
We advocate that Power Traders cross reference the chart with the predictive blue line and neural network indicator to create optimal entry and exit points.
VantagePoint Software Prediction
In the Vantagepoint Software the predictive blue line is the indicator that highlights future trend direction. Whenever the predictive blue line passes above the black line, the artificial intelligence is indicating that the future price direction of the underlying asset is UP.
Power Traders once they have familiarity with a stock return to trade the asset over and over again as long as the a.i, indicates that the trend is UP. This is what has occurred in LIT and offered numerous short term trading opportunities based upon cross referencing the predictive blue line and the neural network indicators.
Global X Lithium & Battery Tech ETF (LIT) from September 29th through January 6, 2021 rallied from $39.04 to $71.00. In these 68 days LIT rallied $31.93 per share. This represents over a 65% return which illustrates the power of using artificial intelligence for market selection and decision making.
As you study the chart observe how the predictive blue line often acts as very strong support, verifying that strong demand enters the market at the price level where the predictive blue line is defining value.
Further Research (Intermarket Analysis)
Do you ever wonder what drives price?
We live in a global marketplace. Everything is interconnected. Interest rates, Crude Oil Prices and the Volatility of the dollar amongst thousands of other variables affect the decisions companies must make to flourish and prosper in these very challenging times.
There is great value to be had in studying and understanding the key drivers of LIT’s price action. This graphic provides a microcosmic view of the Lithium Universe. These factors are all displayed from a standpoint of statistical correlations which show the strongest interconnectedness of prices.
While Lithium has proven to be quite volatile, it has presented traders with incredible trading opportunities in 2020. It is clear that Lithium has rapidly integrated into every corner of our lives. As the new year kicks off, many still believe in the long-term future of lithium, as governments continue to push for more EVs on the road.
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