From Tesla's to children's toys, lithium batteries power our daily lives. The shift toward electric cars has caused demand for the metal skyrocket.
But according to the International Energy Agency, the world could face lithium shortages by 2025. And Credit Suisse stated "supply would be stretched" even sooner.
2020 gave investors a master class on the dynamics of supply and demand. Lumber, cars, houses, and pretty much every other major commodity soared in price when supply chains broke down and failed to keep up with rising demand.
This same situation is quickly approaching with lithium. And lithium mining stocks are on the move.
Sigma Lithium (SGML) is one such company.
SGML is up more than 2,000% since 2020 and showing no sign of slowing down. The stock has been consolidating to form a base since early November and there is clear resistance at $38.
Pullbacks have shallowed – a sign the stock is working through seller orders and consolidating in the "strong hands" of institutional buyers.
There are also rumors circulating that Tesla is considering a buyout of the company.
I took a small position on Tuesday morning when the stock pulled back to its 21-day moving average. And my plan is to add more if and when the price breaks out above $38.
I want to see a strong move on above-average volume and a good close near the high of the day. That would be my trigger to get aggressive.
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