Molycorp Inc (NYSE:MCP): Buying Call above $7


Dallas, Texas 09/19/2013 (Financialstrend) – Provider of rare earth and rare metal materials, Molycorp Inc (NYSE:MCP)’s key business segments include Resources segment, Chemicals and Oxides segment, Magnetic Materials and Alloys segment and Rare Metals segment. The company operates in domestic as well as international markets. The company’s stock is trading just above $6.60 and its 52-week price ranges from $4.70 to $14.44. The stock has gained over 15% in last three months and currently it is trading just beneath its 200 day simple moving average of $6.92. Molycorp Inc (NYSE:MCP)’s market capitalization is around $1.26 billion.

Molycorp Inc (NYSE:MCP) closed at $ 6.86, up by 1.93% from its previous day trading. Yesterday the stock got the momentum up by 4.67% crossing its previous 3 day high, and the volume also helped the momentum as it recorded 8 million against an average of 6 million.

A move above $6.98 would result in a short term reversal, after applying the Fan Lines. the down sloping trendline connecting all the swing highs in the fall from the high at $8.06, got resisted after Tuesday’s movement in the stock.

A move of $6.98 would breakdown the Fan and the downward trend line and will manage pattern in the daily charts. That would provide a target of $7.96 & $8.24, which nicely matches with the upper boundary of the range mentioned above.

If the price can cross the range of $8 – $8.20 credibly, then it can go all the way up to $11 – $12 levels. The volume pattern suggests accumulation at the lower levels. Investors could buy the stock above $7 and add more above $8.20.

Earlier this year due to excess supply in the market, and bothered investors with an unexpectedly large share offering and debt issuance, the stock has been struggling. Some also worry about it running out of money, as its cash outgoings are much more than what it has on hand. The company’s second quarter results were also disappointing though its featured revenue were up but doesn’t match the expectation, and also its net losses are much higher than expected. But, seeing eventually increasing demand, there are expectations that the company can hang on.

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