I haven’t traded the rare earth sector much this year as the group has quieted down somewhat and not presented compelling patterns. Rare earth is a very speculative play, but can provide great moves for active traders. Right now, group leader Molycorp, Inc. (MCP) is forming tight wedge consolidation that usually precedes a big move. Usually wedges are continuation patterns, so we are looking for a buy in MCP through the upper trendline.
If MCP can get through yesterday’s high of $49.50 and then through the bigger resistance of $50 there should be a good trade up to the gap fill of $51.15 and possibly a bigger trade up to $55 should be in the cards.
*DISCLOSURE: Long MCP
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