Why is the Lake Resources share price heading 5% upstream today?

The Lake Resources NL (ASX: LKE) share price is stretching higher in early trade on Tuesday.

At the time of writing, shares in the ASX lithium player are trading 5% in the green at $1.16 on no news.

Meanwhile, materials is the third best performing sector from the open on Tuesday, with the S&P/ASX 200 Materials Index (ASX: XMJ) 0.49% in the green.

What’s up with the Lake Resources share price?

Investors have rallied Lake shares today in unison with the broader sector, as materials shares catch another heavy bid.

Lake Resources shares have bounced from lows and are now heading back to range levels, having slipped from previous highs of $1.59 on 11 August.

There’s been nothing price-sensitive out of Lake’s camp this past month that correlates to the volatility in pricing seen on the chart.

Noteworthy, however, is a bullish note out of JP Morgan on its outlook on the future of the lithium industry.

Citing asymmetries in supply and demand, the broker revised its forecasts for lithium carbonate and spodumene prices by 20% and 25% respectively.

The note provided a bullish undercurrent for speculators and those positioned for the long-term in lithium, with the ASX lithium basket subsequently rallying to date.

If one recalls the calamity that a bearish note from Goldman Sachs on the lithium industry’s outlook caused in June – if this were to happen in reverse, lithium shares could rally further.

To that point, it appears that Goldman may be seeking to revise its call from earlier in the year, which estimated a large erosion in the price of lithium by FY23.

Also, four out of four brokers rate Lake shares a buy right now, with a consensus price target of $2.56, according to Refinitiv Eikon data.

Despite its recent volatility, the Lake Resources share price is still up 109% for the past 12 months.

Returns for this time frame are seen below alongside the materials index.

The post Why is the Lake Resources share price heading 5% upstream today? appeared first on The Motley Fool Australia.

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More reading

• Why is the Lake Resources share price having such a stellar Monday?
• These are the 10 most shorted ASX shares
• Why did the Lake Resources share price rocket 40% in August?
• These were the best performers on the ASX 200 in August
• Here are the top 10 ASX 200 shares today

JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. 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 positions in and has recommended Goldman Sachs. 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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