Hey There Income Hunter,

President Joe Biden continues to push the green energy revolution … and I’ll give him props for that.

Now, under the Defense Production Act, he could invoke a Cold War-era defense law as soon as this week. 

This would help companies access government funding for feasibility studies for new projects that extract lithium, nickel and other EV metals. It could also make existing facilities more productive.

Sure, that means more spending – but at least it would be productive and improve US competitiveness versus China. 

Let’s see how you can profit from a new leg up in the bull market for miners …

EV Material Production Is A Key Part of US Renewable Energy Vision 

The White House is adding lithium, cobalt, nickel, manganese and graphite to items covered by the 1950 Defense Production Act. The act was also used by Harry Truman to increase steel production during the Korean War. 

The idea is that mining companies could gain access to the $750 million available under the legislation. This critical funding will be made available for existing operations, feasibility studies, safety upgrades and productivity enhancements. 

Mining stocks have been trading well and this boost can take them significantly higher over the rest of 2022. 

It’s LIT

Here’s a battery technology company that looks to benefit from Biden’s boost by invoking the Cold War defense law …

Global Lithium and Battery Technology ETF (Ticker: LIT).

LIT tracks a market-cap-weighted index of 20-40 companies involved in global mining and exploration of lithium or in lithium battery production. 

The LIT ETF gives broad exposure to the lithium and battery technology industry

LIT stats.

LIT is actively traded and offers liquid options and decent liquidity for a niche ETF.  

LIT Chart Pattern

LIT is set up nicely for a low risk/high reward trade. Notice the high volume after a break above the 50-day moving average. 

I am waiting for a potential retest of the 50 DMA and a close of the gap down to the horizontal line just above it.

Consider a 79/85 call spread expiring July 15 from there, with a stop loss on two closes back below the 50 DMA.

Bring It Home

The Dems will do anything they can to build positive momentum into the midterm elections this fall … and this boost to the economy is a no-brainer.

A nickel play also makes sense. Due to supply issues related to the Russian-Ukraine conflict, nickel may demand a risk premium similar to oil.

For me, that makes Sibanye Stillwater Ltd. (Ticker: SBSW) a great choice. It recently tested its 200 DMA, however it is sitting below the 50 DMA.

It may be prudent to wait for a breakout above the 50 DMA on above average volume and then jump on board. 

Remember, we are in treacherous waters with an abundance of geopolitical, inflationary and central bank policy risk to monitor. Once you enter any trade, risk management is very important. Make sure to set up alerts so you can limit losses and book profits.

Have a great weekend and as always … 

Live and Trade With Passion My Friend,