Unpredictable, Confusing, Up & Down: Your Spouse, No! Rare Earth Stocks

• Posted by Greg Harmon
• on June 27th, 2011

Rare Earth stocks have been some of the most volatile stocks and that has led to them being some of the most lucrative plays for traders. Now there are a couple of rare earth stocks, Molycorp (ticker: $MCP), Rare Element Resources (ticker: $REE) that are rising and near a breakout level while two others China Shen Zhou Mining & Resources (ticker: $SHZ) and Uranium Resources (ticker: $URRE) look to be failing. A sign of things to come for the leaders or a fake out. Let’s look at the charts.

Molycorp, $MCP

Molycorp has rising off of a bottom near the 200 day Simple Moving Average (SMA) and is now meeting resistance. As it arrives there the Relative Strength Index (RSI) is rising and the Moving Average Convergence Divergence Indicator (MACD) is increasing. These are positive signs for further upside. If it can get through the resistance then there is further resistance at 57.90, before it has free space to run higher to 60.8 followed by 62.74 and then 66.50. If it rejects at resistance then support is back at 47.50.

Rare Element Resources, $REE

Rare Element Resources is also at resistance at 10.80 with a rising RSI and an increasing MACD, but it is showing topping tails, an indication that its move higher may be ending. If it can get over this resistance than it has the room to try resistance at 11.51-11.54 and then 12.70 before a run at 13.50. If it does fail then the 9.40 -9.50 area is support.

Uranium Resources, $URRE

Uranium Resources ended its run today with a bearish engulfing candle at the 20 day SMA. Notice that the RSI had been at the mid line like the two other stocks above , although the MACD was very flat. It may still move higher toward resistance at 1.90 and then 2.00, as it did hold support over Thursday’s high, but if it continues lower then support comes at 1.50 and then 1.39 lower.

China Shen Zhou Mining & Resources, $SHZ

China Shen Zhou Mining & Resources pushed resistance with topping tails on Thursday and Friday last week. Monday it rolled over and had a near Marubozu candle, holding at 23.6% above the down move. It also had a strong RSI and increasing MACD prior to strong move down. There is further support lower at 3.00 and then 2.29.

Does this progression suggest that Molycorp and Rare Earth Elements are both doomed to fall? Perhaps, or perhaps the breakdown in China Shen Zhou Mining & Resources will reverse and have it test resistance again. Either way these stocks remain highly volatile and relatively unpredictable within their unique world. Truly rare earth stocks. Take care in trading them.

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