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Lithium ETF Begins To Break Out Again
From Sean Brodrick: What if I told you that there were metals more bullish than gold right now?
In fact, there are a bunch of them. And I say this as someone who is so bullish on gold in the longer term, it’s a wonder I can wear a hat for the horns growing out of my head.
The energy metals, in particular, are looking hot-hot-hot!
Today, let’s look at a chart for the Global Lithium X ETF (NYSE:LIT).
Looking at this chart, you can see that LIT bottomed back in November. Then it broke out and went on a 20% tear to the upside.
It calmed down and cooled its jets from January through March. And now, it’s taking off again.
And my favorite momentum indicator, the Force Index, says the Force is strong in this one.
Also, LIT’s price action consolidated in what is called a “Flag” pattern. Old Wall Street hands have a saying: “Flags fly at half-mast.” In other words, technicals say the big move is only half-over.
I’m not saying that this fund MUST run up another 20%. I’m just saying that kind of move wouldn’t surprise me.
So what is the Global Lithium X ETF anyway? It holds a basket of stocks that produce or deal in lithium. I’m talking miners, explorers and battery manufacturers. They are leveraged to the metal. LIT’s operating expense is 0.76% per year. And you avoid single-stock risk.
You can find lithium-ion batteries in everything from cell phones to electric cars. Lithium is also crucial to the new energy infrastructure being built around the world now.
There is a lithium supply-demand squeeze going on right now that is so bad …
“How bad is it?” you ask.
It’s like an elephant trying to fit into spandex shorts. It’s gettin’ ugly. Hence, any company that can raise lithium production now or near-term is the bee’s knees for investors.
However, lithium is a mysterious metal, in that it doesn’t trade on an exchange. Price discovery is limited to contracts that are revealed after the fact.
Also, there’s more than one kind of lithium. A lot depends on purity. Ay-yi-yi!
But here’s what we do know: The average price of lithium rose 60% last year. It’s also up threefold since 2014. That’s according to an index by Benchmark Mineral Intelligence.
Still, in February, prices calmed down — rising only slightly. That’s why we saw LIT cool its jets. Then, earlier this month, China’s lithium-ion battery manufacturers announced they would cut prices by as much as 40%. I think that scared investors into thinking that prices for the metal itself would be under pressure.
That chart above says otherwise.
There are many ways to play lithium. Heck, I play the individual miners myself. But for average investors, there’s nothing wrong with buying LIT.
‘Cause a 20% move in a little over three months? Man, all our stock positions should be LIT like that.
Energy metals are an exciting space right now. Lithium is just the beginning. Stay tuned. I’ll fill you in with more to come.
The Global X Lithium ETF (NYSE:LIT) rose $0.72 (+2.69%) in premarket trading Wednesday. Year-to-date, LIT has gained 9.84%, versus a 4.56% rise in the benchmark S&P 500 index during the same period.
LIT currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #9 of 122 ETFs in the Commodity ETFs category.
This article is brought to you courtesy of Uncommon Wisdom Daily.
You are viewing an abbreviated republication of ETF Daily News content. You can find full ETF Daily News articles on (www.etfdailynews.com)
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