[isatrader]

isatrader, what are your thoughts about the industry. I read and was told that the industry is out of gas for a while. I bought at the wrong time (may be around the same time as you) and sold for a loss. I take full responsibility for my decision.

The Rare Earth industry has long term potential as they are essential in all sorts of modern tech devices. However, in the short term the industry had a highly speculative Stage 2 run when Molycorp first listed in July 2010 and all the rare earth stocks ran up until people realised, that they were still very early in their development, not profitable, and not likely to be for a long time, and hence the massive two year Stage 4 decline.

Signs of basing in the four US listed stocks, AVL, QRM, MCP and REE have been occurring lately with AVL moving into early Stage 1, MCP in Stage 1B, QRM in early Stage 2A, and REE in Stage 2A. So as Weinstein's method is 100% technical, and sector analysis is a very important part of it. I've taken this as a sign of improvement in the sector overall, and took a small position in MCP with the aim of adding to it should it improve further and manage to breakout into Stage 2A. As with the investor method the aim is to enter half a position at the Stage 2A breakout point, and then the second half of the position on the first significant pullback towards the breakout point. However, once stocks are in Stage 1, you can begin to accumulate a position in smaller pieces, but obviously you'll have to have much more patience and sit through a volatile sideways range that could still breakdown and continue in Stage 4. So hence why you should only accumulate at that Stage with smaller position sizes, as the trend is not yet up at that point, and has more chance of failure.

I think the fact that you sold out for a loss already says to me that you weren't approaching it as an investor position, as it hasn't been anywhere near the investor stop loss under the Stage 1 range. So it sounds like you are trading it, and not investing in it, and hence you shouldn't be playing Stage 1 stocks really, as the majority of trader positions should be stocks that are already in Stage 2 on pullbacks like your IDRA pick, or on continuation moves like CCIH, which I highlighted before Thursdays open on the trader thread http://stageanalysis.net/forum/showthrea...14#pid1814

I hope that helps

Cheers