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Minyanville's T3 Midday Market Snapshot: Molycorp Boosted by Rising Rare Earth Prices


MCP's CEO sent the stock higher with announcement that sales were on track, rare earth selling prices were higher than expected, and the effects from Japan have been minimal.

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The market is trading marginally lower Tuesday as the nuclear situation in Japan slowly stabilizes and widespread unrest in the Middle East continues. After three straight gap ups, the market ran out of overnight steam as investors remain somewhat cautious. After a volatile two weeks of trading, the market is resting in front of the converging 21- and 50-day moving averages.

Japanese authorities said workers have hooked up temporary cooling equipment to the Fukushima Daiichi plant, but smoke coming from one of the reactors today reminded everyone that the entire crisis has not blown over. In the Middle East/North Africa, Libya remains the main focus as a US-France led coalition continues to strike strategic sites of leader Moammar Gadhafi. However, violence and protests also rage in Syria and Yemen, where some military forces are joining the rebellion against the country's US friendly President.

Tech Leaders Strong

While the market has traded in a tight range, select stocks are moving nicely to provide opportunities for active traders. Among tech,, Inc. (BIDU), Apple Inc. (AAPL), and Netflix, Inc. (NFLX) are acting well. Apple was not able to hold all of its pre-market gains, but despite supply chain issues in Japan and speculation that Steve Jobs could permanently leave the company, the prevailing direction of the stock seems to be higher.

Rare Earth Explodes

Rare earth stocks have exploded today, with group leader Molycorp, Inc. (MCP) up more than 10%. The catalyst for the move in Molycorp, which had been heavy and out of play in recent months, were comments from the CEO that the company's sales were on track, selling prices for rare earth materials were actually higher expected, and that there would be no major issues resulting from the disaster in Japan.

Early on Opticals, Casinos

Two sectors we have been watching closely in recent days but have so far yet to really work are the optical networking group and casinos. The optical stocks were very popular only a month ago, but dismal guidance from Finisar Corporation (FNSR) sent that train to a screeching halt. Competitors in the sector were punished as well, including JDS Uniphase Corporation (JDSU) which had only weeks earlier gapped up after a strong earnings report. We have been looking for a bounce in JDS Uniphase, but may have been a day or two early. Among the casinos, Las Vegas Sands Corp. (LVS) has been beaten down hard over the last month after a disappointing earnings report, and yesterday's pop gave traders an indication the stock could be ready to take back some of those losses. The growth story in Macau remains strong, and at some point Las Vegas Sands will provide a great risk-reward buying opportunity.

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Lasting through April 15, 100% of the donations made to The Ruby Peck Foundation for Children's Education will be channeled to the children of Japan as they attempt to find their footing following this natural disaster; and to kick off this drive, we'll pledge $5000 to get it started. Please do what you can, as it will add up, and thanks.
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