Rare Earth Element Stocks – Immediate Upside Pressure Gone For Now

by Olivier on October 7, 2009

Today was a bad day for Rare Earth Element stocks. By far the best performer during the last months QUC – Quest Uranium which is part of my REEs Sector Overview Chart lead the way down and ended up being down almost 10%. Considering the huge run-up this kind of counter trend reaction should come as no surprise. For now this is a correction and the primary trend is still up. The charts need to bounce soon though otherwise technical damage could start to be significant. More damage and this would start to look like most REE stocks are rolling over.

AVL.TO – Avalon Rare Metals still looks ok but I would like to see the stock bounce decidedly from the 3.00$ level or the 2.80 level. The 2.80 price level was the starting point of the thrusting move accompanied by huge volume. Breaching that level would be cause for great concern and will prompt me to rethink my position. Let’s see what happens and let’s see if the stock can attract buyers who have missed out on the Rare Earth move and want in. My best guess would be that indeed lots of people have missed out and do want in. The long term moving averages tell me this REE bull market is not going to end anytime soon. I could be wrong though. In the end the charts will tell me what to do.

I removed UNG – United States Natural Gas Fund from my public list. Most of these funds don’t properly track their underlying commodity. Most of these ETFs are an outright scam. Leveraged ETFs are much worse. Time decay is insane and contango is an ongoing huge issue. That’s why I significantly reduced the amount of ETFs on my public list.

Here is the chart of AVL.TO with a long term moving average. The break-away gap on huge volume and the fact the MA 200 is pointing upward indicate we still have a long way to go until this bull run is over.


Up-to-date AVL.TO Chart on my public list.

Have a great evening!

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