Molycorp has been trading sideways lately looking as it has found a bottom & doing a reversal. Different catalysts with china concerns losing an export dispute, rare-earth metal output & other factors creating uncertainty, it has been highly shorted as of late with the short interest increasing to 65.4 million shares (26.73%). I have been trading/following for months, looking for an entry point in which we started building a core position at 4.70 & see resistance around 5.09. Looking at the charts as I have a habit of being the early bird I see a pickup in support as I am looking for a short-term spike to the 5.60 range. Long term there has been unusual high option activity on the call-side, in which, if the shorts start to cover I see this breaking out above 6.00. Some bullish
investors had hoped for a surge in demand for rare earths used to make powerful magnets for electric cars, but some vehicle makers were shunning rare earths to cut costs and avoid supply risk. Luxury vehicle maker BMW's Mini E electric car and electric car manufacturer Tesla
Motor's Roadster are powered by induction motors that do not use magnets made with rare earths. Now the USA and others needing MCP
product should create more demand. Praseodymium which is used in aircraft engines as well as magnets for electric vehicles and wind turbines rocketed more than 12-fold from $19.75 a kg in January 2010 to a peak of $250 in August 2011. "Demand is quite modest actually, not bad, but quite modest," said Charles Swindon, managing director of RJH Trading in London. "The market is still somewhat precariously balanced between supply, demand and sentiment."