Searching For A Capitulation Bottom In A Fallen Angel

The lithium mining sector has been thoroughly ravaged in the last year, with pain comes opportunity

During the last year, the lithium mining sector has been absolutely obliterated; producers like Albemarle (NYSE:ALB) have been more than cut in half, and exploration stage juniors have shed 80%-90%. The losses of the last year represent the flip side of the ebullience that these stocks experienced in 2022.

Lithium was the hot sector during 2022 and into early 2023, however, the worm began to turn as 2023 progressed. By Q3 2023, it was evident to anyone that was paying attention that the lithium sector was in the midst of a great unraveling.

In February 2023, I noticed an intense greed percolating throughout lithium junior miners and the speculators in these stocks. The extreme euphoria among speculators in stocks like ALB, BRW, and PMET led me to write a blog post titled “What The Wise Do In The Beginning, Fools Do In The End - Lithium Edition” . In that post, I made the point that we were beginning to see a marked technical deterioration in the larger lithium stocks such as LAC and SGML at a time when droves of highly speculative penny juniors were pivoting to being lithium explorers. This is a phenomenon that I have seen play out time and time again; when the ambulance chaser explorecos pivot to an industrial metal that has already had a gigantic run, it’s a surefire signal that we are late in the cycle and nearing a major turning point.