One US Graphite Stock Should Benefit From China’s Exports Controls

Source: Clive Maund  (11/1/23)

With Western companies attempting to compete with Chinese graphite, Technical Analyst Clive Maund takes a look at one graphite stock he believes is an Immediate Buy.

Starting with the 20-year chart, we see that the company has been around for a long time and started trading back in 2007. Its performance — up to now — has been unimpressive as although there have been some tradable wild swings, it is still well down on its price in 2007.

In mid-2020, it broke out of a huge bullish Falling Wedge pattern that had formed over many years and proceeded to advance until late 2021 before rolling over again and dropping. This advance included a couple of big spikes, which are characteristic of this stock that could work to our advantage if it does another of them soon.

Zooming in via the 5-year chart, we see that the retreat from late 2021 high brought it back to a zone of strong support in the CA$0.90 – CA$1.00 area, which generated another short-lived spike early this year before it came rattling back down to the support again which it has just arrived at, and given the price / volume action on Friday and the important news that triggered it, it is very well placed to do another spike and this time, given that the news is “game-changing,” the spike could be bigger than previous ones and more of the gains resulting from it could stick.

Lastly, looking at the 1-year chart, we see that the decline from the highs last February – March has taken the form of a fairly orderly downtrend channel, and the interesting thing is that, in addition to bringing the price down closer to the strong support mentioned in the last paragraph, it has also brought it down close to the lower boundary of the broad downtrend channel so that it is currently substantially oversold relative to its now flat 200-day moving average, which increases snapback potential.

This month’s new low was not confirmed by momentum (MACD), which has shown a positive divergence, and Friday’s gain on the biggest upside volume since July was clearly a bullish development, especially given the strong performance of other stocks across the sector.

Graphite One is therefore considered to be most attractive here and rated a Strong Buy. While there is overhead resistance on the way up, its effect should be mitigated by the abrupt change of sentiment resulting from the news out of China, meaning that it could do a big spike anyway, resistance or not.

Graphite One’s website.

Graphite One closed at CA$1.12, $0.83 on October 20, 2023.

_{Originally posted at Clivemaund.com at 5:00 pm EDT on October 22, 2023.}

Important Disclosures:

1. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Graphite One Inc.
2. The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.

For additional disclosures, please click here.

Clivemaund.com Disclosures

The above represents the opinion and analysis of Mr. Maund, based on data available to him, at the time of writing. Mr. Maund’s opinions are his own, and are not a recommendation or an offer to buy or sell securities. Mr. Maund is an independent analyst who receives no compensation of any kind from any groups, individuals or corporations mentioned in his reports. As trading and investing in any financial markets may involve serious risk of loss, Mr. Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications. Although a qualified and experienced stock market analyst, Clive Maund is not a Registered Securities Advisor. Therefore Mr. Maund’s opinions on the market and stocks can only be construed as a solicitation to buy and sell securities when they are subject to the prior approval and endorsement of a Registered Securities Advisor operating in accordance with the appropriate regulations in your area of jurisdiction.