Lithium on the Rise (Time to Book Some Profit)
The brightest star in the metals sector of late has unquestionably been lithium. Recent favorable developments pertaining to the electric vehicle (EV) industry have boosted lithium’s profile since the white metal is a critical component for EV batteries.
Further adding to the bullish backdrop for lithium was last week’s announcement by General Motors (GM) that the auto maker was making an investment in a lithium project that could become the largest in the U.S. by 2024. As previously reported, the project would make GM one of the first companies “to develop its own source of a battery metal crucial for the electrification of cars and trucks.”
With shares of lithium producers on the rise, our long position in the Global Lithium & Battery Tech ETF (LIT) has done well lately and is up nearly 4% at the time of this writing Wednesday afternoon. Per the rules of our trading discipline, I recommend that participants take partial profits in LIT after its 9% rally from our initial entry point. (I typically advocate booking some profit whenever a trading position has risen at least 8-10% from the initial entry point.)
I further suggest raising the stop loss on the remainder of the trading position to slightly under the 70 level (where the 25-day moving average makes its presence felt).
I’ll have more to say about lithium and the lithium stocks in next week’s regular issue.