Rare Earth Metals are Out of this World, No Really!

There is a theory in science that many, if not all, of the rare earth metals on the planet came here as debris from space. Tuesday’s price action in the rare earth stocks did much to confirm this theory as they all lit up their rocket ships for the return trip to space. Up as much as 28% wow! But did they reach escape velocity and make it out of the atmosphere or are they doomed to fall back to Earth soon? Let’s take a look at 4 names.

Molycorp, ticker:$MCP

Molycorp moved higher through the 3 month downtrend line, the 20 and 50 day Simple Moving Averages (SMA’s) and the resistance at 49.17. It printed a bullish Marubozu candle Tuesday rising 17.6% on strong volume. Massive. But the move only took it to the edge of the Bollinger bands, which are expanding. And the Relative Strength Index (RSI) is rising steeply and has a lot of room until it is technically overbought. The Moving Average Convergence Divergence (MACD) indicator also just crossed positive. Technically, this stock still looks good. There is resistance higher at 54.43 and then 62.94 and a stop could be placed at 51.50, the high from March 7th or the 49.17 Fibonacci level. Solid fuel boosters away. A continuation Wednesday puts it in orbit.

Rare Element Resources, ticker:$REE

Rare Element Resources also printed a Marubozu while driving through the 20, 50 and 100 day SMA’s on strong volume. This monster rose 23.3%. The Bollinger bands are expanding to allow a move higher and the RSI is rising steeply with a MACD that has crossed bullishly. The next resistance for REE is at 13.96 and then 15 before retesting the high at 17.92. A stop could be placed at 11.96 where the 100 SMA intersects the downtrend line. Starting ignition on the external fuel tank now.

China Shen Zhou Mining, ticker:$SHZ

China Shen Zhou Mining had a bit of an upper shadow so not a Marubozu, but a strong candle as well rising over 28%. This may be have the best potential of these three rare ‘space’ plays as it is just approaching the middle of the Bollinger bands but also has the steeply rising RSI and bullish MACD cross. The resistance above for SHZ comes at the areas near 4.51 (where it stalled today) and 4.95 before it can launch to 5.72 and 6.08 and on up the Fibonacci levels. Waiting for an up move Wednesday and then entering on a move over 4.51 it can then be used as a stop. This one has burned the solid boosters and trying to light the external tank.

But wait I said there were 4 names. Uranium Resources had its solid fuel booster burn last Friday rising over 24%. But since then the main engine has failed to ignite. It needs to clear the resistance at 2.18 to move higher towards the next Fibonacci level at 2.60. The RSI on URRE after Friday looked just like that of the stocks above. Perhaps an omen for what is to come for the sector. But the MACD is just starting to cross up. Maybe it can get that engine lit.

Uranium Resources, ticker:$URRE

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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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