What is Spec? Baby, don’t hurt me, don’t me. No more!

Molycorp (MCP) and the rare earthers are getting hammered again today on reports that China has lifted the ban on REEs to Japan.   [Schrödinger's] cat is out the bag and to think it is business as usual is complete nonsense.   Toyota and Boeing,  just to name a few, are scrambling to secure REEs (see our earlier post).   The great Tim Collins at Real Money posted this morning,

“Momentum favorite Molycorp (MCP) has reversed sharply after hitting $30 yesterday, down some 20% from that level. I would look for the $22.36 area as a potential long entry if we close beneath $24.18, the 13 day SMA which has been support on multiple occasions on this move higher.”

Trading REEs is trading rocket fuel. And we’ve traded a lot of rocket fuel in our day, including Peruvian defaulted debt, Russian defaulted bank debt denominated in French franc, and Sudan debt wall paper at 2 cents on the dollar.  The common characteristics were high uncertainty, extreme volatility, low liquidity, mega noise, and, at the end of the day, high returns.   This is spec, our friends.  Stay small, focused, and disciplined.  Maintain a core position for the long-term with a size you’re comfortable with.

About these ads
This entry was posted in China, Commodities, Equities, Gold, Rare Earth Elements and tagged , , . Bookmark the permalink.

One Response to What is Spec? Baby, don’t hurt me, don’t me. No more!

  1. Pingback: Rare Earth Day 4.0 | Global Macro Monitor

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s