Reversal in MCP Signals Buy

Last week Molycorp had a long overdue key reversal in share price closing at 33.89 after an open of 39.48. This signals a buying opportunity for perhaps in my opinion the hottest and most undervalued stock in the exchange. Up 150% from the IPO in late July, Molycorp has chomped its way up the ladder as the only American REE producer despite how the average volume is only now beginning to stay above 1-2 million.

Note: MCP has turned positive on the day and the last candle may actually be green after the close. As expected, the low on the day was 31.40, right near the 20 Day SMA.

The bearish divergences on the slow stoch all correctly forecasted the pullbacks and the most recent one was no different, a large volume key reversal took place shortly thereafter. The MACD has also just reversed to the downside which is a good indicator of the stock beginning to cool off, but I don’t expect that to last.

It looks like the 20 Day Simple Moving Average which is rounding out at the 31.30 level is the temporary support, and it appears the most amount of buying volume is sitting close to that mark. Barring the FOMC statement, this stock is without question a buy at this level.

Advertisements

About Aaron Basile
Market Technician, Equity/Commodity Trader, Austrian Economist, Contrarian Investor

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: