My first trade: I was long Global X Lithium and Battery Tech ETF (LIT) from January until Sept. 20, when a bearish engulfing candle prompted me to take profits. In January, I bought at $25.70, and sold in September at about $38, but I stayed bullish on the ETF because I like the sector.

My second trade: As I’d hoped, we got a perfect pullback in LIT, bounced off the 20-period moving average on Sept. 26, and I bought 325 shares at $36.73 on positive trading on the 27th. We’re at that key area again where I sold the last time, so I’m watching the chart this week to decide what to do: I need to see a breakout to signal a buy, but a pullback could prompt me to sell.

Hear Petra’s September interview discussing her plans to sell, and then re-buy, LIT

What I’m watching on the chart: This is the third time LIT has tested a breakout resistance zone at $39.98. I’m watching carefully, because Tesla Inc. (TSLA) is roughly 5 percent of LIT’s holdings, and I believe Tesla is keeping the ETF from breaking through resistance.

Tesla is below the 50-day moving average and showing a potential head-and-shoulders setup here. A break of $330.50 would break the neckline of the head and shoulders and potentially bring TSLA it down to test the 200-day moving average of $314.29.

In order for LIT to break out, Tesla must participate, so Tesla is very much in focus for me this week.

The outlook: The other holdings in the ETF are very strong. If LIT does get a breakout over $39.98, I will add to my position because I think there’s 10 or 15 percent of upside, but that only happens if Tesla comes to the party.

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Petra Hess runs PetraPicks.com. She is a technical swing trader and long-term investor in domestic and Canadian stocks and ETFs. At the time this article was published on RagingBull.com, she held 325 shares in LIT purchased Sept. 26 at $36.73; she had no additional shares, options or open orders in the ETF though she was planning to trade it in accordance with this commentary.

Author: Jason Bond

Jason taught himself to trade while working as a full-time gym teacher; his trading profits grew eventually allowed him to free himself of over $250,000 in student loans!

Now a multimillionaire and a highly skilled trader and trading coach, Over 30,000 people credit Jason with teaching them how to trade and find profitable trades. Jason specializes in both swing trades and in selling options using spread trades, which balance the risk of selling options. Jason is Co-Founder of RagingBull.com and the RagingBull.com Foundation which donates trading profits to charity. So far the foundation donated over $600,000 to charity.

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