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Three weeks ago I had a meeting with a private client to look at the best opportunities shaping up for the second quarter. I have a custom-built program that runs through a 2,788 symbols to rank and compare them against each other. LIT was at the top of the list, by a staggering margin.
We weren’t seeing things. While the broad market was still selling off, LIT was already moving sharply higher.
Market down. LIT dropped less. And rallied days ahead of the market.
That's the part worth understanding — and it's exactly the kind of divergence that triggers A+ trades.
Today I want to walk through why LIT moved early, and how this kind of signal works.
Then tomorrow I'll show you specifically which symbols are not participating in this recovery. Where the next bear trades are forming now.
Here's the LIT story first.
LIT — the Global X Lithium & Battery Tech ETF — is up 160%+ from its spring 2025 lows, and it was already moving before the Iran ceasefire rally confirmed the broader market bounce.
Here's why that happened, and why it wasn't random.
1. This is what LIT does.
We watch this ETF because of its track record — not as a story about this month, but as a pattern that has repeated over a decade.
In the summer of 2017, LIT made a quiet move that most people missed. Between April and September, it ran from approximately $29 to nearly $40. That's a 38% gain in one summer, in a sector most investors weren't paying attention to. The catalyst was a shift in institutional conviction about EV adoption. The fundamentals didn't change overnight. The buying started before the headlines confirmed it.
Then came the bigger one. From the COVID low in March 2020 — $17.83 — LIT ran to a high of $97.13 in November 2021. That's a 445% gain in roughly 20 months. This was not a meme stock. It was a sector ETF that moved because the energy transition was being priced in by funds that had been building positions quietly.
After that, it collapsed. $97 down to roughly $31 by spring 2025. A 68% drawdown over three and a half years. Long enough and deep enough that most retail investors lost interest, gave up, or sold at the lows.
That's exactly when it belongs on the watchlist.
Battery demand didn't collapse. EV adoption kept moving. Grid-scale storage kept growing. The fundamentals didn't justify a 70% decline in an ETF that tracks the infrastructure of a multi-decade energy buildout. The selling was sentiment-driven, not structural.
LIT has already recovered from $31 to over $82 today — a 160%+ move off the lows. And the next wave of that move was visible before the ceasefire rally confirmed it.
When a sector that's been crushed for years starts showing strength against a weak tape, that's the signal. The 2017 move started the same way. The 2020 move started the same way.
That's why LIT belongs on the watchlist right now. But track record alone doesn't explain what happened during this specific selloff.
2. What the divergence looked like in real time.
When SPY was falling in late March and early April, LIT wasn't falling with it. It was flat. Then it started ticking up.
That divergence — a sector holding or rising while the benchmark falls — is usually institutional money moving. Not retail. Not momentum chasers. Someone with real size accumulating while the tape is scary, because they already see something the headline writers haven't written yet.
The macro reason became obvious later: the Iran war and Strait of Hormuz disruption made the case for grid-scale battery storage and domestic energy independence stronger, not weaker. Oil spiking toward $90 is an argument for electrification, not against it. The market eventually agreed.
But the price signal came first. The fundamental explanation caught up to it. Not the other way around.
That's the pattern. It repeats. And it's visible in the data in real time — if you're watching the right things.
3. The geopolitical selloff set up a paradox.
When a sector holds or moves higher while the indexes fall, institutional money is rotating somewhere. It doesn't happen by accident. Funds that must stay invested are moving out of exposure and into sectors with better relative setups.
Next Wave Daily is built specifically to catch this divergence — not what's going up with the market, but what's going up despite the market. That's the earliest and cleanest entry signal.
This is why the Iran ceasefire rally confirmed the move rather than created it. The strength was already there. The catalyst just made it visible to everyone else.
The energy transition doesn't stop for a trade war. That's the larger picture.
The infrastructure for grid storage, EVs, and domestic battery manufacturing is a multi-decade buildout. Sentiment swings. Supply chains get rerouted. Capital flows to where the build is happening. The companies doing the building don't change because of a quarterly earnings scare or a tariff headline.
Most traders are watching the tape trying to read what the macro noise means. We watch which sectors and individual names aren't responding to that noise the way theory says they should.
Get access to our intermarket divergence trades in real time with a free trial.
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The full list is free today, but it won’t stay that way, so get your copy now.
Tomorrow, we’ll look at bearish setups that are forming in the market.
— Andrew Falde
Edge Navigator
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