The Lake Resources share price has surged 11% today. Can it sustain the rally?

Shares of Lake Resources N.L (ASX: LKE) surged around 11% higher in early afternoon trade on Friday, now retreating slightly to rest at $1.46 apiece.

Despite no market-sensitive news, investors have rallied the Lake Resources share price from a low of $1.32, as the stock looks to reverse out of a downward trend.

Zooming out to a longer-term view, and the Lake Resources share price has clipped a 45% gain this year to date.

TradingView Chart

What’s up with the Lake Resources share price?

ASX lithium stocks such as Lake were tackled hard this week amid large weakness in the broad segment seeing just about every miner down at least 10% by the end of play on Thursday.

Investors sold off lithium players at a rapid pace amid the release of a bearish note from Goldman Sachs downsizing its forecasts for lithium prices.

Additional headwinds via a cap on lithium carbonate prices of US$53 per kg from Argentina, a potential battery substitute, and electric vehicle maker BYD’s possible purchase of six lithium mines in Africa, have plagued the outlook for lithium producers.

Despite the calamity, lithium carbonate prices are buoyant and remain top-heavy at A$96,884 per tonne.

The strength in lithium pricing is perhaps one factor underpinning the resurgence in the Lake Resources share price today.

Large accounts and institutional investors backing the company are likely to be buyers at these pullback levels, especially if holding Lake Resources shares as part of an investment mandate.

Volume is also more than 9.6 million shares and tilted to the upside, amounting to more than half the 4-week average of 17.99 million shares.

A total of 581,292 shares were settled at a range of $1.45–$1.467 in today’s session with one block of 177,705 shares of noteworthy size, according to Bloomberg data.

After paring a fair slice of gains in 2022, the Lake Resources price has still held a 423% gain in the past 12 months of trade.

The post The Lake Resources share price has surged 11% today. Can it sustain the rally? appeared first on The Motley Fool Australia.

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Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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