Rare Earth stocks took a breather and are trying to re-setup. The top two rare earth stocks Rare Earth Resources Ltd (REE) and Molycorp, Inc. (MCP) staged Red Dog 80-20 reversals today and look poised to climb back toward highs.
Given the percentage gains the rare earth stocks saw over the last few months, it was not surprising to see them digest the moves. At this point these stocks remain purely speculative plays with no earnings, so you have to determine whether they are right for your risk appetite.
After staging a reversal today, I believe MCP can see a bounce back to $53-54 area. If you missed the buy today you can target a buy at Friday’s high of $47.50. The stop would be today’s low of $44.
REE is the weaker of the two but is also worth a look. Today it also had a nice Red Dog reversal entry. The first target would be $15ish. If you didn’t enter today I would look to enter through today’s high at $13.65
with a stop at $12.58.
You can also look down the food chain to AVL and SHZ and look to buy them through Friday’s high as well. I will target this type of strategy for a 1-3 day trade, but depending on composure I could use this reversal as a longer-term entry.
*DISCLOSURE: Long MCP, REE
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