In recent weeks we have written about Molycorp (MCP) and North American Palladium (PAL), two companies in the business of taking unusual stuff out of the ground. In both cases, we were looking for a well-behaved bottom before seeing the situation as a buying opportunity. And in both cases it did not happen.
Let’s begin with Molycorp. We didn’t like the ebbs and flows of volume after the bottom in August and suggested (Rare Earth, Where Have You Gone) that a re-test of the lows was in order, hopefully with a healthy dose of apathy. Well shares of MCP have been cut in half since September’s brief rally. It’s not what you would call a soft landing. There is, however, an opportunity here for a quick trade in MCP. For the last three days, the shares have been trading below the lower Bollinger band. Stocks can rarely live outside the bands for more than a few days at a time, so we expect a short rebound here.
More recently, we wrote (Playing With Palladium) about North American Palladium (PAL). Based on a weekly chart, we felt that shares of PAL would be interesting if only they could contain the latest bottom within the Bollinger bands. As you can see on the updated weekly chart, prices have once again pierced the lower band. Unlike MCP, the price of PAL shares has recovered to a level above the lower band. Still, we can not recommend the shares just yet. Meanwhile, shares of competitor Stillwater Mining (SWC) continue to hold firm.