Rare Earth Metals are Getting Re-Buried

I was running through charts last night preparing for the day before a long weekend. One sector that has been on fire lately has been these rare earth metal stocks like Molycorp (Ticker: MCP), Rare Element Resources (Ticker: REE) and China Shen Zhou Mining & Resources (Ticker: SHZ) and others. I have no position in any of these stock but have seen a lot of activity and interest from the trading community and they are all over the television, so I thought I would take a look. What a bunch of stinkers. Here’s what I see.

MCP has been falling the past 2 weeks but it looks like there is plenty of room for this to go lower. It lost support of the 20 day Simple Moving Average (SMA) yesterday and is now looking for support at 44.93, a 50% retracement of the up move, and likely through it to either 40.68 a 61.8% retracement or the 50 day SMA at 39.47. As I write this that is still more than $6 lower.

REE is a similar story. After a big run up it has been falling back for the last two weeks. But this stock also looks like it has more downside in it. It lost support of the 20 day SMA today and now loos to be headed to the 50 day SMA at 11.59 or a 38.2% retracement of the up move at 11.51. That is another 12% lower.

SHZ is a little bit stronger but is exhibiting the same downward bias. After a series of bull flags on the run higher the last one is getting a little bit too negative. The difference on this one is the Moving Average Convergence Divergence (MACD) indicator has crossed lower, not just “kissed”. There is still some room down to the 20 day SMA at 7.30 and a 38.2% retracement of the up move at 6.93.

You are likely to read about some or all of these names over the weekend and how they might be a good buy on the dip. The charts tell me not yet.

Trade’m well.

(As always you can see details of individual charts and more on my twitter feed and on chartly.)

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