Summary: Lithium prices generally moves with oil.
Why: As oil prices go up, demand for alternative fuel sources for automobiles also rises..(electric cars). This means Lithium.
Here is a chart of LIT (Lithium ETF vs USO). You can see they generally move in lockstep.
However, there are not very many lithium companies worth playing on U.S. exchanges and the well known penny stocks don’t move well with oil – AMLN and AMEL. These two generally suck and are only worth intraday scalps on big news.
Lithium One (LITHF) is an ok stock to trade against oil prices, but it’s so thinly traded that it’s risky and the volatility is through the roof. However, if timed right with oil, it does offer nice returns. So, when it looks like oil is entering a big rally, LITHF might be something to look at for a day trade.
The best stock in this area is SQM – you might as well stick with the best if you’re interested in playing Lithium. SQM is a global company with it’s Lithium resources in Chile. They mine year around and provide over 25% of the world’s supply. They are also a leader in plant nutrition products and tons of other things. If you’re looking for a swingable lithium play, this is the one. Find a bottom/reversal in oil and that might be your entry for SQM.