Lithium producer Sociedad Quimica y Minera de Chile S.A. (SQM) was upgraded to a buy Tuesday by TheStreet's Quant Ratings service. Lithium is one of those elements that are key to the manufacture of lithium-ion batteries which we cannot live without in today's on-the-go society. Let's visit with the charts and indicators to see if they, too, are saying "buy."
In the daily bar chart of SQM, below, we can see the start of an uptrend. Prices are above the bottoming 50-day moving average line. SQM is still below the 200-day line which has begun to flatten. The daily On-Balance-Volume (OBV) line has been in a downtrend to the end of August. The line has firmed the past month and shows the start of a shift to more aggressive buying.
The Moving Average Convergence Divergence (MACD) oscillator has turned up above the zero line recently to generate an outright go long signal.
In the weekly bar chart of SQM, below, we can see a weekly upside reversal. Prices are still below the declining 40-week moving average line but a rally above $51 would break the line.
The weekly OBV line shows a peak back in last September but this September the line shows strength. The weekly MACD oscillator has crossed to a cover shorts buy signal.
In this Point and Figure chart of SQM, below, we can see a nearby price target of $49.27. It is not a big upside price target but it would be a significant breakout and could open the way to a rally to the $58 area, in my opinion.
Bottom-line strategy: SQM is a buy from a quantitative perspective and the charts are turning up. Aggressive buyers could go long here risking a close below $42. My price targets are $49.25 and then $58.