(This is an excerpt from an article I published on Seeking Alpha. Click here to read the entire piece.)
I last wrote about Molycorp (MCP) in the middle of its last rally (see “Molycorp Soars After Making A Strategic Acquisition (Transcript)“)…{snip}…After ten days of consolidation below the 50-day moving average (DMA), MCP is finally making a breakout move. Buying volume is dominating selling volume as MCP has finally punched above the 50DMA. If the recent history of similar moves is any indication, MCP is starting a fresh rally, perhaps to fresh all-time highs (granted, the last two breakouts started with double-digit price gains).
*Chart created using TeleChart
While MCP’s put/call open interest is not quite at recent highs, short interest is (see Schaeffer’s Research). MCP call volume picked up on Tuesday…{snip}…Traders appear to be bracing for a big move as early as this week. I am leaning toward a continuation of the brewing rally. The big wildcard is whether the current breakout can generate rapid follow-through…
{snip}
Be careful out there!
Full disclosure: long MCP