AVL entry: Rare Earth Industry Drama

As mentioned before AVL is one of the few Rare Earth miners in North America.  In June, China restricted some exports of rare earth.  Strictly from an economic standpoint this was a clever move to continue to insure their manufacturing sector can absorb some of the appreciation of the Yuan.  The battle of the US and China over this issue took an interesting turn as legislation to impose tariffs designed to impact China was passed by the House of Representatives. Article from cnn.  

Other news about the rare earth industry:

http://www.bloomberg.com/news/2010-09-29/pentagon-losing-control-of-afghanistan-bombs-to-china-s-neodymium-monopoly.html

http://resourceinvestingnews.com/7758-china-export-cuts-good-for-rare-earth-juniors.html

On to the entry.

My entry was at 3.54, which is 4 cent off the lows.  It is interesting that the lows came very close to touching that 20 MA.  After this drop, the stock moved up considerably, closed 19 cents from the lows. The MA are also lined up bullish with 20 on top of 50 on top of 200.  A 61.8% retracement could be fairly be argued, If this count holds, the upside target of this is wave 3 is 5.23 and 6.51.

However, look at an expanded time frame.

 
AVL is close to challenges its all time highs which occured on Sept 8th, 2009 @ $4.24.  It could be argued also that the true top in 2009 was slightly less @ 3.98 on Sept 23rd, 2009.  So breaks of this level could be a solid entry into this stock.  This position I think I will have a loose stop as it is quite volatile.