Despite the REE sector being widely written about in financial publications and talked about on cable financial news networks, shares of rare earth penny stocks have slipped under the radar.
Many American investors solely follow Molycorp (MCP:NYSE), Rare Earth Elements (REE:AMEX) and Avalon Rare Metals (AVL:AMEX), with Molycorp being the only one of the three that actually produces at this time.
Even in these uncertain times, rare earth metals are key components in the production of green cars, wind turbines, lap tops, cell phones, solar panels and yes, products as simple as light bulbs.
As of Monday’s close, unless you are a bottom fisher, it might sound crazy to even consider stepping in and going long one of the three RE stocks mentioned above. Never mind stepping in and purchasing one of the once hot rare earth penny stocks.
However, people forget that rare earth penny stocks are not considered “concept stocks” which often carry high multiples in bull markets, but frequently crumble when markets turn negative.
Aside from the industrial uses mentioned above, there are real supply and demand concerns to think about. From most accounts China happens to produce roughly 97% of rare earth metals and prices have risen sharply in the last few months. China’s stranglehold on these elements has caused bipartisan grumblings in Washington out of future national defense concerns.
Now why this week might not be the best time to buy speculative issues such as MCP, REE and AVL, they certainly deserve to be watched at these levels. And what makes just as much sense, is watching a few different rare earth penny stocks, just in case the sentiment changes or a political event occurs. Here are some companies that have tiny market caps and are underfollowed. The super speculative names and symbols are listed below:
Rare Earth Penny Stocks to Watch
Rare Earth Metals (RAREF.PK)
Quantun Rare Earth (QREDF.PK)
American Rare Earths and Metals (AREM:OB)
In this market these rare earth penny stocks could get even cheaper, so just add these names to your stocks watch list for now.
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Here is a list of stocks to watch. They range from ETF’s and large caps to penny stocks.
Ford Motor Company (F:NYSE) Good news in the AM sort of got traders excited. However, F just fell back in line with the rest of the market. The eventual GM secondary could weigh on F in the short term though.
Cascadia Investments (CDIV.PK) One of the 17 penny stocks that was halted by the SEC today. CDIV was once a favorite of penny stock scalpers and had a cult following, look for more info on the name in our upcoming blog.
Molycorp (MCP:NYSE) Down in the aftermarket after announcing a convertible debt offering for $200 million. This deal may put a little pressure on the group for a day or two.
Nokia (NOK:NYSE) Rating downgrade from Fitch has seemed to stop any bounce potential. This stock has been a laggard for a while, and seems like it may contunue to be.
Blackrock (BLK:NYSE) Asset managers seem to be out of favor right now and BLK has undergone a sharp pullback after a rally off it’s secondary offering. Plus, the high price tag makes BLK a little more volatile.
Nanometrics (NANO:NASDAQ) The once high flier has made a comeback and will now be added to the S&P Small Cap 600 Index. Watch for big market on close orders from index funds in Thursday’s trading session.
Lehman Brothers (LEHMQ.PK) Sold off despite the settlement news. Once a zombie penny stock always a zombie penny stock. Please remember that these types are trading vehicles and should only be played with lottery type money if you are investing for the long haul.
Wizzard Software ( WZE:AMEX) This AMEX penny stock was the top percentage gainer on the exchange today. The dollar volume was light, but this could be a follow through candidate if the market reverses. Add WZE to you penny stock list.
Silver Trust ETF (SLV:NYSE) We have tried to keep SLV on the list just to keep it fresh in your mind. The ETF rallied once again and while it may not get parabolic again, we could see another nice run.
Washington Mutual (WAMUQ.PK) Despite fellow zombie stock LEHMQ being extremely newsy today, WAMUQ once again occupies the top slot on IHUB most active message boards.
Check back for more penny stock news, IPO updates and stock market research.
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Although this entry is about the psychology of buying good penny stocks, it is different from others. Today, I will try to focus on the mindset needed to trade hot penny stocks.
As human beings, we often let our emotions impact our decisions. Sometimes those emotions can help us, but they often hurt us at times too. And when buying or selling any stock, those same emotions can cost you your hard earned investment capital. With that being said, these mistakes can vary, in both degree and consequence. For instance, lets use General Electric as an example (GE:NYSE). Just imagine that you have a position in this solid large cap name, and then assume you make a mistake trading it. Now nobody ever wants to lose money in the market. It doesn’t matter if that mistake is in a mutual fund or a top notch, or in a basket of good penny stocks. In reality, the account statement at the end of the month doesn’t discriminate, it just gives you a balance. However, let’s just say your loss or mistake in GE was semi-normal. A big up or down day on a Dow stock usually consists of a 2 to 3 percent move. My point is those types of mistakes can usually be dealt with in listed names, if you have a plan and focus on a solid risk/reward strategy.
The game is much different when an investors deals with both bad and good penny stocks. Too often, I have seen many investors bragging about making $2000 in a penny stock transaction. Now don’t get me wrong, there is nothing wrong with taking a profit, but many people don’t realize that penny stocks are often difficulty to get out of. So that $2000 profit may have come by investing $30000 and potentially risking $5000. That risk/reward scenario doesn’t make sense.
Now there are many ways to trade, to set stop loss orders, and to scale out of positions.The key is to pick a trading strategy that fits your style, and more importantly your personality. If you are super emotional, write down your desired profit and acceptable loss before you do the trade. Also, don’t be afraid to scale out of a profitable position in thirds or even quarter pieces. The commission structure of most firms that deal in online penny stocks make this possible. Remember, good penny stocks come around more frequently than you think.
Stay tuned for more market reports, IPO market updates and Penny Stocks
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