Earlier today on CEO Chat I was asked by @Allan what my favorite “breakout stocks” are right now:
So I decided this would make for a good blog post. In addition, given the recent consolidation/pullback we have seen in many lithium explorers I think it’s a good time to focus on some of the most attractive companies/charts in this sector.
As I mentioned on the chat stream at the top of my list is Lithium X (LIX.V – $C110 million market cap):
The breakout from the 3-month descending triangle targets C$2.60+ and the volume profile confirms the recent upside trend. This is an impressive breakout. I see short term support near C$1.80 with some minor resistance near C$2.15.
I also like the volume and price action profile of Lithium Americas (LAC.TO – $C278 million market cap):
LAC has followed a constructive stair-step uptrend throughout 2016 and recently found support near the rising 50-day simple moving average. Today’s low (C$.87) now becomes an important reference point with new highs quite possible as the uptrend resumes.
Wealth Minerals (WML.V – C$58 million market cap) shares many similarities (albeit at roughly 1/5 the market cap) to LAC including the importance of the C$.87 price level:
WML has seen strong accumulation in the C$.75-C$90 area in recent months and a breakout above C$1.06 would target C$1.40+.
While the first 3 charts I have highlighted are all top tier lithium explorers with decent sized market caps (all are C$50 million+), I thought I would offer a fourth chart of a sub C$10 million market cap lithium/cobalt play that could potentially experience much larger percentage gains than its heftier peers, Scientific Metals (STM.V – C$9 million market cap):
The STM chart also shows solid accumulation since April (high volume up days) with a major support level at C$.07 which also happens to be the 50% retracement of the April-May advance. Above C$.10 STM shares could quickly see fresh highs.
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