While shares of Rare Element Resources (REE) are down nearly 40% in 2013, and nearly 50% over the last year, there are some positive signs that the rare earths industry as a whole is ready to recover. This means that companies in the space that go largely unnoticed are slower to react, but represent significant upside potential to investors. As the industry firms throughout the course of 2013, the market should begin to look to rediscover some of these overlooked names, presenting solid opportunities; a 50% retracement of the slide would represent a 33% return to investors and is not an unrealistic possibility, and that retracement has already begun.
A Look at the Industry
Once a favored sector of the market, rare earths have been hammered over the last several years for a variety of reasons. To begin with, the bulk of rare earth materials come from China and are deeply impacted by geopolitical issues that come from the Chinese government. The Chinese government has tried to tighten the procedures surrounding the export of rare earth materials, which, in turn has caused artificial fluctuations in rare earth prices.
To put some of this in perspective, a recent Reuters report stated that "China will cap rare earth production at 93,800 tonnes over the whole of 2013 as part of efforts to rein in unlicensed production in the sector, the country's land and resources ministry said on Friday." Limitations on production can be good for the industry, but with the Chinese government known for making significant reversals, watching China is paramount.
Note 1: Please alert the board of any stock crossing the 20,50,20dma’s on daily or weekly chart.
(link back for more charts) Note 2: Please do an 8x34 chart on the stock; the 8x34 cross is the initial reversal sign of most stocks. Use the link below, just replace the ticker symbol. Post on the board when a stock crosses the 8DMA or the 34DMA and when the 8x34 cross is about to occur.
8x34 cross in the making, look at Full Sto, and CMF indicators. just replace the ticker with your TICKER
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