The popular Lightning Round segment of Mad Money is when a few lucky callers get to ask Jim Cramer about stocks they are interested in. One caller Tuesday night asked about MP Materials Corp. (MP) : "This is vital to our new economy and I'm a buyer," responded Cramer.
We last looked at MP on March 17 and wrote that "In this current market environment with the rate on the 10-year Treasury pushing higher, I would take a more cautious approach with MP. Hold existing longs but raise your stops to $39 from $30."
Traders would have been stopped out in late March as prices broke to the downside. Let's check the charts again to see if this might be a good time to rebuy MP.
In this daily Japanese candlestick chart of MP, below, we can see that prices are now trading below the cresting 50-day moving average line. Trading volume expanded on the decline telling me that some traders voted with their feet.
The On-Balance-Volume (OBV) line has weakened from early March and tells us that sellers have been more aggressive. The 12-day price momentum study is not yet showing us a bullish divergence to tell us that the selloff has slowed.
In this weekly Japanese candlestick chart of MP, below, we see a less than positive picture. We can see a large bearish engulfing pattern last month as prices peaked.
The weekly OBV line shows a decline from early February telling me that sellers have been more aggressive for a number of weeks. The MACD oscillator has crossed to the downside last month for a take profit sell signal.
In this daily Point and Figure chart of MP, below, we can see a potential downside price objective in the $19 area.
Bottom line strategy: Rare earth minerals are indeed key to our modern way of life and our military security. The chart of MP, however, is currently suggesting we could see further price weakness. MP could test the lower end of support around $30 and a break of that area could precipitate further declines. Keep MP on your market minder and shopping list.