I Found a ‘Rare’ Opportunity for Raw Material Investors

A Real Money subscriber who went long REMX has now emailed me, asking about the prospects for one of the larger stocks in this ETF — Lithium Americas Corp. ( LAC) . Let’s check the charts.  

In this daily bar chart of LAC, below, we can see that prices rebased from March to early August and then began another rally phase with prices going up three-fold. LAC is trading above the rising 50-day moving average line.

LAC is also trading at twice the level of the rising 200-day moving average line — a level that some analysts consider extended or overbought. The On-Balance-Volume (OBV) line has been strong since early August and supports and confirms the price gains. The Moving Average Convergence Divergence (MACD) oscillator has been above the zero line since early August. 

In this weekly Japanese candlestick chart of LAC, below, we can see that prices made a long base down around $5 before the mark-up phase. LAC is trading above the rising 40-week moving average line. The weekly OBV line is super strong and the MACD oscillator is in a clear bullish alignment above the zero-line. 

In this daily Point and Figure chart of LAC, below, we can see that the software is projecting the $55 area as a potential price target. 

In this weekly Point and Figure chart of LAC, below, we can see a longer-term price target in the $77 area. 

 

Bottom line strategy: One of the interesting things about “rare earths” is that there are no substitutes. Another interesting thing about the subject is that our modern tech-driven world has a huge appetite for them. Traders could go long LAC on a dip to $34-$33 risking to $29. Our first price target is the $50 area — a 10-fold increase from that long base pattern.