• Chart of the Day: Molycorp, Inc. (MCP)

    by  • January 17, 2013 12:22 pm • Charts to Watch, Quick Hits, Tony Venosa's Chart of the Day • 2 Comments

    Today’s chart is of Molycorp, Inc. (MCP), a development stage company, which engages in the production and sale of rare earth oxides in the western hemisphere. Its rare earth products include oxides, metals, alloys, and magnets for various inputs in existing and emerging applications comprising clean energy technologies, multiple high-tech uses, defense applications, and water treatment technology

    Ticker:  Molycorp, Inc. (MCP)

    Strategy:  Short Trade

    What I Am Looking At:

    • MCP greatly underperforming, down more than 5 percent year-to-date and 69 percent year-over-year
    • Forming a bear flag during the past 5 trading days
    • Up against price resistance (blue horizontal line)
    • 1/10 downside gap could provide additional resistance
    • Large call open interest (majority bought-to-open) at the 9-strike could provide a roadblock for any advances in shares.
    • Any unwinds of these 9-strike calls could pressure shares lower
    • 50-day bought-to-open call/put ratio 2.38, more than twice as many calls purchased than puts during the past 50 days, ranks as the 75th percentile of all readings taken over the past year (an indication of optimism among option players)
    • Unconfirmed earnings schedule of February 21st

    Trigger:  Break of short-term uptrend line (bear flag), target $7.00

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    Tony Venosa, CMT is a Senior Options Strategist and works on the trading desk at Schaeffer’s Investment Research. He joined Schaeffer’s in 2010. He has worked in the finance industry for over 15 years. He began his career as a trading assistant in Chicago on the floor of the Chicago Mercantile Exchange. He later moved upstairs and worked as a commodities broker on both the retail and hedging side. He left the brokerage industry to begin his trading career as a proprietary equities trader at a Chicago firm. In 2000, Tony moved backed to his hometown and continued trading his personal account. He later went on to earn his Chartered Market Technician designation. He earned a B.S. in Finance from Miami University. Tony’s main focus is short-term directional option trading.


    2 Responses to Chart of the Day: Molycorp, Inc. (MCP)

    1. akabeachguy
      January 18, 2013 11:39 am at 11:39 am

      Set an alert for MCP at $9.15 and sure enough it went off right after the open. Stock lifted to $9.21 – perfect!

      Went to short it but, alas, there were no short shares available. Checked 3 different accounts – no short shares anywhere. Checked puts – way too big a spread to get involved. Oh, well. Onto something else. I see it is now $8.83 so great call.

    2. akabeachguy
      January 17, 2013 6:45 pm at 6:45 pm

      Thanks. May have to take it for a ride. Will let you know if it was a pleasurable one. Would love to see a push to $9.15 – $9.20 or so to make the entry.

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