On a day when Nvidia reported post-closing earnings, not many people were paying attention to anything else, especially the chemical company. We’re going to change that, at least temporarily: Albemarle (ALB) has been showing signs of technical vibrancy lately, and it should be on our radar screens from both a short and long-term perspective. First, the bad news: ALB, a leading lithium supplier, has seen lower highs and lower lows since peaking in November ’22, with little sign along the way that it is finally ready to reverse the long-term trend. trend. There’s no use trying to bottom out a stock that continues to make new lows…until it actually shows a noticeable change in character. Over the past few months, ALB has begun to turn things around. Therefore, the aforementioned character changes have now been achieved. In recent days, the stock has been hovering near the 200-day moving average, which it has struggled to reach (let alone stay above) since early 2023. For two months, they both played supportive roles. The distance between the 50-day moving average and the 100-day moving average is also the largest in the past two years. This is a constructive development. The stock’s 14-day relative strength index, which measures momentum, has also remained in the upper half of that range since September, one of the longest stretches in the past two years. This is another positive feature and a prerequisite for any possible major transformation. Bullish Pattern Breakout All of this has led to the construction of a potential five-month bullish inverse head and shoulders pattern. ALB has again tried and failed to stay above the neckline over the past two weeks, so a better effort is needed this time around. In fact, if the stock moves higher soon, the measured action target would rise to $138. From its peak in November 2022 to its low in August 2024, ALB fell 80%. While this was the largest peak-to-trough move of the past 20 years, the stock has also experienced three other significant multi-year declines, totaling -70% (2007-09), -50% (2014-15), and -70% (2017)-20). When the past three horrific downturns ended, ALB rebounded strongly over the next few years, reaching all-time highs each time. The resulting percentage increases are self-explanatory: +370% (2009-11), +250% (2015-17) and +600% (2020-22). Again, this is not a short-term phenomenon. It will likely take several years for ALB to get back above the last high of 334 again. In order for this process to continue, ALB must first extend from the latest daily pattern breakout. Disclosure: (None) All opinions expressed by CNBC Pro contributors are theirs alone and do not reflect the opinions of CNBC, NBC UNIVERSAL, its parent company or affiliates, and may have been previously published by them on television, radio, the Internet or spread on other media. The above is subject to our Terms and Conditions and Privacy Policy. This content is for informational purposes only and does not constitute financial, investment, tax or legal advice or a recommendation to purchase any security or other financial asset. The content is general in nature and does not reflect any individual’s unique personal circumstances. The above may not apply to your particular situation. Before making any financial decisions, you should strongly consider seeking advice from your own financial or investment advisor. Click here to view the complete disclaimer.
