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LIT: Is the Lithium ETF a Buy Amid Growing Demand?

Published 05/17/2023, 03:17 AM
Updated 07/09/2023, 06:31 AM

Most associate lithium with EV usage.

The largest holding in the ETF basket (Global X Lithium & Battery Tech ETF (NYSE:LIT) is Albemarle Corp. (NYSE:ALB).

The U.S.-based company is not purely a lithium business as they also produce chemicals related to petroleum refining and consumer electronics.

Interestingly, Tesla (NASDAQ:TSLA) is a holding in LIT as well as ALB, only with about ½ the percentage of weight.

Factoid: Lithium, the drug, is made from lithium, the metal.

Besides the use in EVs, lithium-ion batteries are the key to rechargeable power for laptops, phones, and other digital devices.

Expectations for longer-term demand support a rebound as governments are encouraging people to switch to EVs.

Some forecast lithium demand by 2040 will be 16 times higher than present-day levels.

Technical View: Is LIT a Buy?

On the daily chart, the 200-DMA is above the 50-DMA, and the price is in between. That is a recuperation phase or one of hope.

The slopes on both MAs are slightly negative but not by too much.

LIT Daily Chart

I particularly like the risk right now. The low of the day LIT cleared the 50-DMA or 60.90, should hold.

On the Real Motion Indicator, there is a bullish divergence.

The momentum is above the 200-DMA, while the price is still quite far. That is typically bullish for the instrument.

Tuesday, May 16, LIT is having an inside trading day or trading within the range of Monday. That means pause or uncertainty.

We will look for a weekly close around or just above current price levels, as patience is the key in current conditions.

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ETF Summary

  • S&P 500 (SPY) 23-month MA 420 Support 410 then 405
  • Russell 2000 (IWM) 170 support - 180 resistance
  • Dow (DIA) 328 big support to hold
  • Nasdaq (QQQ) 329 the 23-month MA, and big caps trying hard
  • Regional banks (KRE) 42 now pivotal resistance-holding last Thurs low
  • Semiconductors (SMH) 23-month MA at 124-can it hold for the next two weeks?
  • Transportation (IYT) 202-240 biggest range to watch
  • Biotechnology (IBB) 121-135 range to watch from monthly charts
  • Retail (XRT) 56-75 trading range to break one way or another

Latest comments

LIT is heavily contaminated with battery producers, it really does not reflect Lithium prices. To be in Lithium only buy Albermale, SQM and Mineral resources the 3 western largest producers (public companies), but the chinese companies Ganfeng and Tianqui are probably as or almost as big as the ones mentioned (also public companies in the HK stock market)
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