From Schaeffer's Research:
Rare earth producer Molycorp, Inc. (NYSE:MCP) is in a brutally severe downtrend since peaking near $870 in spring of 2011. Shares are down more than 53% year-to-date, and 80% year-over-year. On Monday, MCP made a 52-week low at $9.40.
This summer we have seen an acceleration of this downtrend. Prices have broken down from a long-term channel, as seen below on the weekly chart. This can sometimes indicate an exhaustion of the current trend. Combining this observation with the enormous spike in volume (green circle on the volume bar) two weeks ago may lead to a bottom.
Now, it would be an understatement to say the company has had a string of disappointing earnings and revenues, but sometimes "it's always darkest before the dawn." The following bullet points will try to convey the technical, as well as the sentiment, picture for shares of MCP.
- A spike in volume may be an indication of a bottom, as older owners of MCP basically capitulate their shares to new shareholders.
- Shares spent a few days last week under the round-number $10 level before gapping higher on Tuesday, leaving an island-type reversal.
- Significant gap resistance between $13 and $16 from the company's Aug. 2 earnings report may be a short-term issue for shares....MORE
