Molycorp: Weekend Update
Long/Short Equity, Special Situations, Momentum, Contrarian
Seeking Alpha Analyst Since 2013
Molycorp, Inc. (MCP) has displayed price action that indicates a significant reversal may be forming.
On Friday, 1/3/14, there was some selling that resulted in a daily reversal bar with volume.
However, looking at the weekly chart of MCP below, we can see that it managed to close within the previous trading range which is a good thing for those positioned long:
Charts by StockCharts.com
The chart shows that there was a multi-week attempt to push MCP below the 5.00 level that has failed. The flat stochastic at the right edge (now turned up) is typically present when there is a sustained trend in place. In this case the trend was down.
The key item on the chart is that the trend did not accelerate lower after breaking the 5.00 support area. This lack of continued down-trend raised the possibility that MCP was about to reverse.
We are now looking for either a continued un-hindered move higher or a move into the previous trading range that shows signs of further accumulation. At this point it is not possible to say which of the two will take place.
Keeping in mind that the set-up could fail, our stop is currently placed at 5.46, which is far enough away to not be hit with a temporary price spike.
Disclaimer:
This report is for discussion purposes and contains our opinions only. This posting is to publicly document our thinking and market analysis actions within the Three Ten Trading entity. The data was obtained from sources believed to be reliable. However, we make no guarantee as to the accuracy of that data.
Investing or trading in equities, futures or options may result in a significant loss of capital, total loss of capital or a loss greater than available capital.
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Respectfully,
Paul Mosgovoy, President: Three Ten Trading, LLC
Thank you for reading.
Disclosure: I am long MCP, .
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