And, that pinch in the bollies didn't last long...
A weak pop on the day we last looked at it, and then a resumption in the drift lower... with it now following the lower bolly down as the bands widen back out...
That's a pattern I've seen often enough... that could take quite a while to play out... with a drift lower along the lower bolly on the dailys... drifting down toward the lower bolly on the weekly, which is somewhere way off the bottom of the chart, below $5.75
The weekly shows "drift" sideways... paired with a slow pinch in the bollies, while painting almost as large a reverse pincher... as it had last April...
Williams % R is moving lower, half way already...
OBV is moving lower... already below the bands...
And MACD is starting to roll over and head south...
Watch for the roll to the cross over lower in MACD being threatened in the weekly chart again now... after the daily rolled over again off the peak back in mid-December, and then failed the test in early January to make a double top.
Prior patterns on the weekly show, as it crossed over, or got close... big down days and weeks followed...
From $32 to $20 between the roll over and the downside cross over...
From $23 to $10 on a failed cross to the upside...
From $12 down to $6 on a roll over to a "bump" that didn't even cross over to the downside...
Now the MACD is rolling over again, on the weekly... with everything else already pointing lower...
The reverse pinch already formed... says there's not much hope of avoiding it...
I don't think you consider this a "screaming buy" until there's a serious pinch being formed... and not a contested reverse pinch pattern.
The short term technical question for traders (versus that for value investors who don't buy anything that isn't a screaming daily/weekly chart pincher)... is whether it will hold the prior low on the next move down, bounce off it well when it gets there, and then put in a nice double bottom... to oppose the recent double top and leave the issue unresolved... or if it will just slide on through and keep going lower on the next downside acceleration...
I don't see the LACK of dynamism in the chart that I want to see at a bottom, with the capitulation (!!!) apparent in the lack of enthusiasm... with even supporters surrendering, and deciding to try trading something else... with the declining volume and interest in the trade finally telling me the trade has run its course... with a big ole pinch on the chart. Short interest increased sharply in August, only after it dropped through support at $16, after peaking over $70 in April of 2011... Obviously a better short candidate in April of 2011 than in August 2012... but, I'm not saying they're wrong about it going lower from $16, just that they were slow in recognition of the issues... which I thought were pretty obvious a long time ago...
The issue of whether or not it will hold the bottom at $5.75... probably isn't a technical question as much as it is an issue of fundamentals, at this point. I think the drift sideways now is "waiting to see"... exactly that.
If the REE market bounces back sharply, and REE prices move higher... ?
If the issues with the downgrading of their debt... are bypassed, somehow... and they're able to fund "the rest"... including all of that stuff that still has to be funded from the pre-acquisition plan, just in order to make the plan they're prosecuting for Mountain Pass, work ?
And, if neither of those things happens ? If REE prices drift, or worse, and they fail to fund the work that still needs doing... and then "can't get there from here" on the rest of the stuff... which they DO need to have happen, to be able to service the already too large debt load ?
Then, in that case, "lower"... is an understatement... although it's true that "zero" and negative numbers are lower. I think there is an obvious existential risk... that was created by management's poor choices and failures in not properly timing the markets in REE... and nothing else.
I don't think the issue is one with any concern over the relative quality in their assets... rather than a financial issue with bad timing, and excess management optimism, the prices they paid for things too near the peak in the market, decisions overly based in belief in short term market pricing issues... that resulted in them basing long term plans, on short term expectations in price... even though they HAD to know better, even at the time while they were engaged in doing it.
There clearly is a rapidly growing issue with the risk in dilution, now... with dilution from share sales to fund the next rounds... whatever they are... not nearly the limit in the scope of the issues, given the risks that get realized if they're not able to make things work well enough with what they have now, and thus aren't able to gain the footing required to enable them to carry the debt they've already taken on... and take on more... which they'll need to do... to "get there"... even to the capability in the original plan.
The debt load taken on prior to the horribly ill advised and premature acquisition spree... when that didn't actually help, at all, in resolving the issues that needed to be addressed, while getting the capability required to compete with some authority in the market... may well have doomed them, in spite of the otherwise obvious appeal in the economics and potential of the Mountain Pass deposit.
I'm far more optimistic about the potential, and actual value relative to the current position in the market, of a couple of others... most notably, Orbite Aluminum, Sarissa, and Geomega Resources... ranked ordered by market cap... with that being the full list among those in niobium/REEs that I'm willing to discuss at present...
Each of those... are squarely focused now on developing proper access to, or their own independent separations capabilities... properly tailored to their specific requirements... and doing that at a pace that makes sense... right-sized for their specific situations and position in the market... without wasting piles of $$$ in the effort "chasing tails" while trying to "win the race". They are VALUE focused plays, with managements that are growing real value, over time, rather than taking and throwing piles of Wall Street's money at the "problem" in a crisis mode, likely taking their cut up front, and over-paying for everything, knowing they'll probably be long gone, while letting a sad assortment of future bagholders worry about sorting it all out later...
I'm not critical of MCP management for taking the money off the street when people were working as hard as they could to force as much of it on them as they could take...
I am critical of all the foolishness that followed in the wake, once the $ was in hand... and, obviously, for their failures in not realizing they'd better time the market well, and sit on the cash, being patient,while waiting for the optimal timing to deploy it for maximum effect...
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