It's Been a Few Months: We Should Call That Girl Lithium Back

Back in mid-January we took a long, hard look at the various lithium-related charts and surmised that the once-hot sector was breaking well-defined (and steep) trend, effectively putting the group in the penalty box until the weather warmed up. 

Fast-forward a few months later (unseasonably cold temperatures and precipitation in the northeast notwithstanding), and the lithium related stocks: ALB FMC SQM, and lithium ETF, LIT, all look as though they are a tad overdone to the downside after suffering through winter corrections. 

Thus, for the first time in 2018 I am interested in this group on the long side.

Using Albemarle as a proxy for the group, we can see the updated weekly chart, below, following-through off the steep uptrend break we noted in in January. 

Now, however, ALB is back down to a significant prior price area from 2016 and then early-2017, in the mid/upper $80s. We are seeing a noteworthy initial bounce off that area, combined with strength in FMC LIT SQM off beaten-down conditions of their own. 

While the glory days of nonstop upside momentum may not immediately return for lithium, the formerly crowded trade now looks to have effectively unwound to the point where plenty of longs have been shaken out and we can take a better look at the group from a risk/reward perspective on the long side again for the next week or two.