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Lithium Chemtrail Leads to Goldmine Profits! (ALB)

Posted on August 12, 2021

Another swing of the bat today with North Carolina’s Albemarle Corp. (NYSE:ALB), the company whose name no one can pronounce but everyone wants to date because of L-i-t-h-i-u-m.

Albemarle is a chemical company that also has a lithium division.

And that’s all it takes!

You’ll recall that we played ALB earlier in the year, pocketing 102% in just ten weeks.

And now we do it again.

Because the situation is ripe.

Look first at the fundamentals –

  • The company’s P/E is sky-high at 38.75,
  • She offers a lowly dividend yield of 0.65%,
  • Price to Book is a LOL 4.53, and not least of all –
  • Earnings fell this year by 29.90%.

Aren’t we all made of chemicals?

Batflu labor shortages have kept the company’s expansion of their Western Australian Kemerton mine on hold – and driven costs up considerably.

No one knows when a balance will return to the Australian job market, but in the meantime Lithium prices have seen a boost.

That helped the company’s latest quarterly filing, but the meat of the earnings beat was a result of the sale of their Fine Chemistry Services business.

So whence the hype?

Have a look at the charts –

This is six months’ worth of daily trade on ALB, and it presents the following –

  1. RSI is overbought (in green), as it was back in January, when our last trade was set and a significant decline ensued.
  2. MACD, too, looks stretched and ready to roll lower.
  3. The stock spiked higher by 50% over the last eight weeks and formed a bearish rising wedge formation in the process (in red).  Should price descend below the lower edge of the pattern, a selling spree will ensue that rivals the intensity of an Uri Geller fork-bending episode.
  4. A fall to 195 – or even 170 – could ensue, as gaps need filling at both those levels (in purple).

Now look at the weekly –

The weekly fundamentals also point to imminent danger –

  1. Most notably, we have a fresh weekly overbought condition, which, coupled with the daily (above), should pique the interest of short-sellers (in green).
  2. MACD’s rise is also too steep to be sustained, and we therefore expect a rollover in the immediate future.
  3. Price itself appears to be in the midst of a parabolic lava spew (in blue), and
  4. The bunched moving averages at 100 are calling like the sirens of the western sea, so…

Tie yourself to the mast!

We’re expecting a significant decline, and we’re playing it SPECULATIVELY.

Thus –

A Jew and His Money recommends you consider selling the ALB September 17th 250/260 CALL spread* for a credit of $1.80 (6.30/4.50) and buying the ALB September 17th 210/195 PUT spread** for $2.10 (3.60/1.50).  Total debit on the trade is $0.30.

[*Sell the 250 CALL and buy the 260 CALL. **Buy the 210 PUT and sell the 195 PUT.]

Rationale: With downside expected, we want to minimize our outlay while maximizing our profit potential.  The trade’s structure provides well for that.

The weeks leading up to Rosh Hashana are always fraught with danger, and this year should prove no exception.  The Al-mighty takes what’s His before the New Year strikes, and there’s nothing anyone can do about it.

The G-d of the world will judge, and our livelihoods will not be spared if that’s how he chooses to balance the books.

The danger here, of course, is that the decline will not carry as deep as our long 210 PUT, in which case we’ll be out our initial $0.30 debit.  With just five weeks to expiry, time is a crucial factor.

Maximum gain on the trade is $14.70 (difference between the PUT strikes less the initial debit).

Maximum loss is $10.30 (difference between the CALL strikes plus the initial debit).

Many happy returns,

Matt McAbby

 

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