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Rare Earth Stocks Bullish, Oil and Gas Stocks Bearish


The rare earth stocks we've been watching moved out yesterday while another round of weakness hit the oil and gas sector.

Sometimes it takes patience to let a pattern mature before it breaks out. We first started looking at rare earth stocks a few weeks ago and yesterday were rewarded for our patience with Molycorp (MCP) and Avalon (AVL) heading out. The key level to watch in Avalon is $3.00 where there has been a seller for some time. As long as the stock remains above this level I'm encouraged and will give the bulls time to take the name higher.

While I chose to avoid individual short setups yesterday such as EOG Resources (EOG), I did initiate a short position in the Oil Service ETF (OIH) which is confirming a head-and-shoulders break along with an angular trend break to the downside. With a stop at $42.20 the trade presented decent risk reward and is worth keeping on the radar.

I also chose to add to my Basic Material Double Short (SMN) yesterday as the ETF did an abrupt reversal into the afternoon and looks as if it is working on a sustained bottom. This and a bit more in this morning's video which can be found below:

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Positions in AVL, MCP, SMN, OIH

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