You will come across specific terms in these notes (FLD, VTL, and so on). Rather than explain them each time, you will find definitions here: guidance notes for Hurst cycles terminology
Lithium ETF – ingrained downtrend informs intermediate term roadmap.
This is a weekly chart analysis of the Lithium ETF from 2020. Hurst initiates among you will recognise that the cycles are different from the standard nominal model. David identified a clear four year cycle in the data, which divides down into four annual cycles (which are marked as the light green 40 week cycles of the standard nominal model). The whole thing works and we are pretty confident it tells the story.
Clearly a long cycle (four year) peak is in place (November 2021). The uptrend line across the middle of the chart shows a clear regime change from strong up to down with the breakdown occurring last September. We believe that the four year cycle decline lasts until next Spring and probably circa 32-35 which is roughly 30% more downside. Sure there will be spikey uplifts along the way, and in fact a representation of the 20 week cycle trough is due shortly. However, our stance is that these lower time-frame upswings will peak early and be crushed back down by the underlying downtrend element.
Incidentally, before you start thinking that the Lithium ETF is a homogeneous representation of the mineral, it is and it isn’t. It contains miners on the supply side of course, but also names like Tesla, TDK and Panasonic on the demand side. There are many diverse cross currents driving all of these assets, not just the price and availability of Lithium.
This post was first published on Hurst Cycles Notes.
