LIT Lithium ETF Weekly Chart; Downward-Sloping Channel; Positive Divergence Developing

Lithium was all the rage 17 months algo. Timmy Trader would brag at the water cooler each day that he was in LIT and making a mint. Timmy lost his shirt late last year. All commodities moved lower in 2018 some more so than others. Gold, silver, copper and oil recover this year after the Federal Reserve decided to goose markets again with easy money to protect America's privileged class. Lithium and other rare earth minerals, strategic commodities, have not recovered.

Rare earths are receiving lots of attention in recent days after President Xi visited one of China's processing facilities. Xi directs a veiled threat at President Trump that access to rare earth minerals, that are key for the production of smartphones and used extensively in battery, electronic, medical and energy applications, may be cut off. China controls nearly 90% of the rare earth minerals market.

LIT was lit up like a Christmas tree as 2017 ended and 2018 began. Everyone invested in lithium looked like Einstein's. What could possibly go wrong? If you were looking at the neggie d (red lines), the top call was simple. You would have been shorting LIT in early 2018 and down she goes. The downward sloping channel remains in play.

The green lines show positive divergence setting up. It is dicey, however, since there is currently strong downside momo. The LIT 2-hour chart is positively diverged and ready to bounce now. The daily chart is possie d except for the MACD so it wants to bottom this week. LIT is hunting for a bottom right now but remains susceptible to the US-China trade war rhetoric.

The ADX purple box shows how the uptrend was a very strong trend until early 2018. On the flip side, even though the trend is down for 17 months, the ADX does not consider the downtrend to be strong. This is encouraging for LIT bulls. The Aroon red line is pegged at the ceiling at 100 so it has nowhere to go but down and this previous behavior identified the bottom in the LIT price at Christmastime six months ago.

LIT has potential as a long play going forward. That downside momentum over the last month has to be respected, however. The 22.0-24.80 area is likely a nice area to start buying LIT. If you are a longer-term player you can scale-in to LIT; buy it right now, then in a week, then the week after that and then sit on it for a few months. Keystone does not currently hold a position in LIT long or short. It would only be a potential long play going forward. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.