REMX (Rare Earth Metals ETF) will trigger a long entry on a break above 37.80, which is the top of this potentially powerful basing pattern. Price targets are T1 at 46.55, T2 at 57.25 & T3 at 73.95 with a suggested stop on a close below 33.94 (the bottom of the base which is defined the trading range that REMX has been confined since mid-December).  Rare Earth stocks have been on a roller-coaster ride over the past five years, largely due to price manipulation from China (by far the largest producer of rare earth metals, producing a whopping 95% of the world’s rare earth supplies in 2010). I’ve included a chart of the STOXX Global Rare Earth Index to illustrate the roughly 90% plunge in rare earth prices since the 2011 peak.     click here the view the live, annotated chart of REMX

 

Although there are a few individual rare earth companies that trade on US exchanges (MCP, TROX, RTI, TC, & GMO… all which are components of REMX as well as a few others like AVL, QRM, & REE), the majority of the REMX holdings are global companies that trade on various overseas exhanges (click here for a complete listing of the REMX holdings). REMX will be added as both a typical swing trade as well as a long-term trade idea as I am looking for a likely primary trend reversal (i.e.- a new bull market), assuming that REMX makes a solid and sustained break above the basing pattern and the charts still look constructive at that time. As such, I would expect this trade to take anywhere from around 9 month to a year or more to reach the final target (a nearly 100% return), assuming that the trade plays out to its full potential.

As with most trade ideas on RSOTC, multiple price targets are used to accommodate various trading styles and time frames. Price targets, including the three targets on this trade, are placed at levels where I believe the odds of a decent reaction (pullback and/or consolidation) is likely. Some traders might opt to book partial or full profits at any of the initial targets while more active traders might chose to micro-manage a trade (e.g.- close the long position on the initial tag of the target, possibly reversing the trade or a quick pullback short trade, assuming the charts confirm, then once again going long on either the pullback or a solid break above the target level). Also keep in mind that in order to minimize the chances of just missing a fill on a closing trade, the suggested target levels are set somewhat below the actual resistance levels (the dashed horizontal lines).