Pricing Strengths Pre & Post COVID Despite Weak Fundamentals Outlook
Potential market bottoms forming for PLS & GXY. Buy recommendation for low-cost brine and scalable spodumene producers.
Catalysts
relative performance of brine players such as ORE pre COVID vs. relative strength in spodumene producers after COVID selloff
Higher than expected adoption for EVs from government
GXY's Expansion plans
Potential candidate for hedge against future inflation
Considerations
Large increase in spodumene prices in the near term likely to be curtailed by existing players scaling proaction as soon as prices allow
Current consensus of glut being resolved in lithium market is late 2021-2022
Strategic partners & funding
Short Squeeze/Fundamentals failing to keep up with pricing
Entry: Average price of $1.10 on 03/08/2020 Stop Loss: $0.685
Comment
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Increasing volatility ahead. Just on a side note: ALB & SQM are approaching key resistance levels.
Trade active
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Update: Increase stop loss level to $1.0 Capital at risk: 10%
Comment
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Note: This is not technical or fundamental analysis. It is purely a hypothetical scenario.
With regards to Strategic partners & funding, there is a company called CATL that completed a 2.85 billion USD capital raising earlier this year with plans to vertically integrate into next generation battery/FC production chain.
This means that GXY's and CATL interest may potentially align. CATL may appear as an interested party for GXY's future capital raising.
If I am a sophisticated entity with insider information if things are heading into this direction(which I have no clue), then I would be hoarding shares right now.
Trade closed manually
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Trade closed manually @ 1.165 to lock profit due to today's gap.
@debergs, Hi debergs, I only have some confidence identifying potential bottoms and tops through my experience with charts so I can't give you a target with conviction. What I am doing is waiting for the trend to confirm and staying with it until it reverses.