Will Pilbara Minerals continue it's uptrend? $PLS

24 Mar 2018

Fundamental analysis: PLS.AX continues to secure landmark deals with top tier companies with the most recent: Binding Subscription Agreement executed with POSCO and its wholly-owned subsidiary, POSCO Australia Limited (POSCO, market cap: 28T) , for an immediate upfront A79.6M equity investment at A0.97/share in Pilbara Minerals, with the proceeds to contribute towards accelerating the Stage 2 (5Mtpa) development this year.

The market reacted with a huge gap up resulting in a 12% increase on high volume. The next 5 candles showed signs of profit taking. The reaction to the POSCO deal mimics greatly to the reaction given on 02 May 2017 when PLS secured a BOA + finance with Ganfeng (SHE: 002460 , market cap: 50b) i.e. gap up on high volume, followed by profit taking.

Market sentiment: Lithium sentiment has been greatly diminished by the Morgan Stanley report on prices reaching a peak, with fear of uncertainty and over supply. I am of the personal opinion that lithium demand is still greatly underestimated and market is showing gradual positive signs of recovery.

Technical analysis: 3month chart is showing higher lows and (slightly) higher highs. The next candle or 2 (if a doji appears) should determine whether PLS will continue it's uptrend or continue sideways.