ChartWatch Markets: Make or break for Nasdaq, plus PLS, MIN, LTR likely beneficiaries of burgeoning lithium bull market

In today's edition of ChartWatch Markets, we'll be covering the technicals for:

• Nasdaq Composite
• Lithium Carbonate Futures (Benchmark month, back-adjusted) GFEX
• Australian Spot Spodumene Concentrates (CIF China)

Nasdaq Composite Index

Analysis

The demand-side is still active: They’re still buying the dip ✅

That’s the conclusion I’m drawing from Friday’s Comp candle. Why? 🤔

It’s to do with how Japanese candlesticks are formed: White body = Close > Open (i.e., “C” > “O”).

So, Friday’s white-bodied candle tells us that it effectively opened low (at 22544) and closed higher (at 22900). I put to you that shortly after open the Comp dipped to the session low of 22436, before rallying up to the session high of 23073. Toward the end of the session, it dipped back from 23073 to close at 22900 (without bothering to look at the intraday chart – this is simply the most logical conclusion).

The range was 637 points. The close was 27% from its high and 63% from its low. Volume was above average.

Q. Who had control of the candle?

• A. Demand-side, because the price closed above the session’s balance point (assuming there’s no gap from the prior session, and there wasn’t).

Q. Was it convincing control?

• A. Not terrible, could have been better – I prefer a close within 10% of the high to signal strong demand-side control into the close.

Q. Was it consistent with a blowoff in supply / sweeping buy the dip confidence that "the low" of this pullback is in?

• A. Not particularly, (modest close vs high and only slightly above average volume) – but I suggest the gap-lower open did see steady buying to take advantage of lower prices. Steady is still pretty good!

Conclusion: Friday’s candle grade: B+

Solid, but could have been better. I gave Friday's candle the “+” because of where it occurred. So, we’re seeing how price action (i.e., candle shape) and motivation (i.e., volume) combine with location (i.e., points of demand and points of supply).

Make no mistake: Things could have gotten very ugly at Friday’s open – a massive gap down to challenge a known point of demand in the form of 22563... 😱

Yet! the bulls made a solid stand. They’re still buying the dip. 22563 is indeed a point of demand – certainly a credible point requiring ongoing monitoring.

But! Supply is also more active than a died in the wool would like – and it started to make some sort of stand at the short term trend ribbon. I know this because of the formation of that upward pointing shadow that started just below the short term trend ribbon. 🧐

Note, that short term trend ribbon has now neutralised – and for nearly 4-hours, it acted as a zone of dynamic demand (see intraday chart below – peak just after midday!).

NASDAQ Composite Index 14-Nov intraday chart

What we know about the Comp's present technicals:

• Falling peaks & falling troughs +
• Neutral (amber) or downtrend (pink) – i.e., not up (green) +
• Price has closed below the short term trend ribbon +
• Short term trend ribbon acting as a zone of dynamic supply
• = ST Downtrend
• The long term uptrend is very much intact.

Friday’s low if 22436 replaces 22563 as the closest point of demand, but the “real” demand-floor likely lies at 22058-185.

Supply? That’s really all the way up now. There’s the short term trend ribbon (presently 23020-23190). Then there’s 23570. Then there’s the “big one” of 24020. Given FOMO (Fear Of Missing Out) is on the backburner, and HOFU (Holding Out for Further Upside!) is similarly subdued, it might take us a long time to challenge that last one!

A quick resolution to this “pullback” is a good one. I.e., we start knocking on – and knocking out – each of those points of supply very quickly. The longer we linger below them – the weaker grows the two vital drivers of all bull markets: FOMO + HOFU!

Looking down, as scary as that might be, we don’t want to see further dalliances with 22436-22563, and we certainly don’t want to go anywhere near 22058-185!

View

I remain comfortable at 2/3RP (2/3 Risk Position corresponds to a 67% allowable capital allocation limit for US stocks based on my personal risk management model).

Key levels

22436-22563 it is a "critical line in the sand" for demand-side control – and therefore a close below this point will trigger a cut to my US capital allocation limit to 1/2RP = ⚠️. The next critical zone of demand below that is 22058-185 – and below it, the short term trend is likely down + the long term trend is under significant pressure = ⚠️. 23570-24020 is the critical zone of supply – the Comp must close in or above this zone with a strong demand-side candle for me to even consider moving back to FRP.

Lithium Carbonate Futures (Benchmark month, back-adjusted) GFEX

Analysis

I know we only covered this one, gold, and silver, recently, but they’re the most interesting trends at the moment!

Particularly for GFEX lithium carbonate futures – which on an intraday basis, appears to be consuming some very important supply between 87410-91460.

91460 was set on 8-Oct 2024, so we’re talking a possible 15-month closing high (the last close above 91460 was on 25-Jul 2024).

But the exhibition of demand-side control here, of motivated buyers bidding up price in the face of a credible wall of supply, should not be surprising. We’ve been tracking the “Turnaround Setup” as my model calls it, here for several weeks now – and we've been eyeing 87410-91460 as a critical bastion of potential latent supply.

Add to this, ASX lithium stocks have dominated my ChartWatch ASX Scans lists for even longer (the first Feature Uptrend charts in the sector began appearing in early-August!).

Trends + Price action + Candles + Volume.

That’s all that matters here… leave your narratives at the door lithium bulls! Yes, D vs S = P is aligned with your one-eyed bullish narrative for now, but this is a coincidence (it was the opposite for 3-years! 😉)!

Today, Monday 17-Nov (who knows about tomorrow!), the situation is this:

(Consistent with demand-side control = ✅ vs Consistent with supply-side control = ⚠️)

• Short and long term trend ribbons: ⬆️ / ↔️, widening (getting stronger), the price is above both ribbons and both ribbons are acting as a zone of dynamic excess demand = ✅
• Price action: Rising peaks and rising troughs (i.e., supply removal and demand reinforcement) = ✅
• Candles: Demand-side candles (i.e., white-bodied candles and or downward pointing shadows) = ✅
• Volume: Consistently above average volume signals substantial demand and substantial supply – but when paired with the trends, price action, and candles above – suggests strong demand-side motivation (i.e., bidding up price ) and substantial supply removal (i.e., via above average volume into defined zones of supply)

The next major supply zone is likely to be between the 6-Dec 2023 major point of demand at 96460 and 97210. Above that, 105260-106610 (yes we're talking "1" handles!).

Today's candle is live, we must discount it (that's why I haven't cut short the red-dashed lines and pink supply zone between 87410-91460 just yet!). Demand is likely at 84940, and then down to the dynamic demand of the short term uptrend ribbon (presently 80910-83110).

View

Happy to stay the course on lithium carbonate. My technical model allows me to either add or maintain risk (i.e., "+R" or "=R").

Key levels

84940is a key zone of demand, the lithium price should not close below it if the demand-side is in control of the lithium price = ⚠️ The short term uptrend ribbon (presently 80910-83110) is the critical zone of demand, a close below it nullifies the short term uptrend. 96460-97210 is the next zone of supply, I will be watching the price action there very closely to confirm or deny the resilience and commitment of the demand and supply-sides.

Australian Spot Spodumene Concentrates (CIF China)

Analysis

This is more of a confirmation of what's happening in the GFEX lithium carbonate futures market, as I don't feel there's a need to supply specific ongoing demand and supply analysis here. Also, as only closing prices-sans-volume is supplied by the data provider I use for this chart (i.e., no candles and no volume! 👎👎) – I'm missing two critical components of my analysis!

I simply note here that the trends, price action, and interaction with the major points of demand and supply show a healthy short and long term uptrend – yes I said "and long term uptrend"! This chart is proof in pictures (i.e., D vs S = P) that the new lithium bull market has well and truly begun!

How long will it last? I don't know. I couldn't possibly care any less. 🥱

It will last as long as it does. Nothing I say, do, or think is going to change that – and I am not required to do any of these pointless things to make money from it!

I must simply follow this trend as long as my model suggests that MOTN (More Often Than Not) lithium's P is going to ⬆️. And looking at the chart above, that's a ✅ for now!

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