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

    by  • December 7, 2012 2:05 pm • Charts to Watch, Tony Venosa's Chart of the Day • 0 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:  Stock has the potential for big volatility, consider a straddle/strangle

    What I Am Looking At:

    • Rare Earth Metals ETF (REMX) underperforming, down more than 16 percent year-to-date
    • MCP greatly underperforming, down more than 63 percent year-to-date
    • Up against numerous points of resistance, namely the August low, the downtrend line from April peak, and the declining 40-day moving average=  possible major inflection point
    • The last 2 weeks are in a tight contraction mode, expecting an expansion move shortly
    • Peak call open interest for December series resides at the 10-strike, majority sold-to-open, could be a major headwind for shares
    •  Short interest at all-time highs, represents nearly 37 percent of the float
    • 10-day buy-to-open call/put ratio stands at 3.33, meaning 333 calls purchased for every 100 puts, possible hedging action from short sellers
    • 3 out of 5 analysts who cover MCP maintain “hold” ratings, average target price = $11.36
    • Quarterly revenue growth (yoy) – 49%



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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.


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