Molycorp (MCP) is getting a lift today as the news of China’s output of rare materials and potential for stopping additional production facilities was announced.
The short ratio – 8 days to cover shows that there is a good deal of short interest and the technical pattern has the a fast zone that goes to $23.40. From there, there is still a potential area up to $24.70 that could be reached.
Notice on the chart below that the green line will act as resistance. The stock held the $20.18 high volume node and then bounce hard on the news.
Obviously the longer-term trend is down and the short-term trend (since April) may be broken if shares close above 22.00 today.
From the NYT:
HONG KONG — China’s cabinet issued its first white paper on rare earth industry policies Wednesday, acknowledging that poorly regulated mining of rare earth metals had caused widespread environmental damage and promising an extensive cleanup and a crackdown on illegal mines.
The document warned that inefficient mining and refining practices had squandered scarce mineral reserves and produced extensive emissions of radioactive residues, heavy metals and other contaminants.
“Excessive rare earth mining has resulted in landslides, clogged rivers, environmental pollution emergencies and even major accidents and disasters, causing great damage to people’s safety and health and the ecological environment,” the white paper said.