Battery metals and EV stocks had an amazing 2020, some select stocks had an even stronger 2021. The year 2022 started exceptionally well for lithium and cobalt stocks, but then got hit with broad market weakness. All other stocks in battery and EV experienced a sell-off in 2022. The year 2023 started even more interestingly: a steep drop followed by a recovery in most battery & lithium stocks. EV stocks had a steep drop followed by a strong bounce last week. It looks like our cyclical market call in the battery sector is pretty accurate: How To Play The Green Battery Super Cycle In 2023?
BATT ETF is the sector ETF we use to understand risk vs. opportunity in the battery metals and technologies sector.
Its chart is truly special. Admittedly, the start of the year was very shaky and uncertain. For those that only look at horizontal levels, there was a breakdown, in technical terms. We were not too concerned, because the chart has so much more information that horizontal price levels.
While BAT ETF was weakening around year-end, it was also clear that a bullish reversal was a very high probability outcome simply because the chart was working on filling the gap (from November 2020).
As seen, that’s what happened: price came down to ‘fill the gap’ that was created around Nov 9th, 2020.
Big picture, the decline between Nov of 2022 and January of 2023 was a successful secular breakout test.
In the meantime, in recent weeks, the bounce was solid enough to push through the falling trendline that originated in November of 2022 (also ATH).
In chart terms, there are 2 really important ‘events’. On the one hand, the rise above the falling trendline (which started a few days ago, almost confirmed now). On the other hand, the really important level was and remains 16.33 points. Both conditions need to be in place for a new uptrend.
We believe that, ultimately, BAT ETF and stocks in this sector will start a new uptrend. That’s because high demand in the battery sector combined with a chart that is improving significantly and improving broad markets (slowly, but surely, in an environment with no market crash in 2023).
We suggest to be selective, not buy the ETF, but rather pick out some gems in this ETF. Stock picking should be lucrative, is our point of view.