A Pullback for LAC Is Likely
LAC is likely to revert to the 25 daily moving average for the following reasons:
1. The stock has gained nearly 40% in the last month with no major correction. Even though it has largely been mirroring the rise in Lithium futures, this rate of growth is unsustainable.
2. The daily price chart shows a very clear rising wedge pattern accompanied by both volume and RSI bearish divergence.
3. Aside from any TA patterns, the RSI has been hovering around 70 for the last couple of weeks which signals the stock is overbought.
4. The max pain price is roughly $17.50 for both Sept 17 and Oct 15 options which would suggest a correction will happen soon. In the rising wedge pattern, there isn't much time left.
My position is PUT options on Oct 15th at the 22.5$ pricepoint (marked by the red line).
1. The stock has gained nearly 40% in the last month with no major correction. Even though it has largely been mirroring the rise in Lithium futures, this rate of growth is unsustainable.
2. The daily price chart shows a very clear rising wedge pattern accompanied by both volume and RSI bearish divergence.
3. Aside from any TA patterns, the RSI has been hovering around 70 for the last couple of weeks which signals the stock is overbought.
4. The max pain price is roughly $17.50 for both Sept 17 and Oct 15 options which would suggest a correction will happen soon. In the rising wedge pattern, there isn't much time left.
My position is PUT options on Oct 15th at the 22.5$ pricepoint (marked by the red line).
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