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.

Market indecision

The key to playing this market is to wait for an opportunity.  Don't chase them.

I was stopped out on friday from my small short position on the nasdaq.  However today we had a slight down day today.  Remember you want to take calculated risks, the short I placed was a setup with a stoploss that made sense, just above the recent high.  Friday it was taken out.  If this week we continue to slide, one could say you should have stayed in the trade and had a looser stop loss. Perhaps, however, after a big up day on friday would it really make sense to hold that position?  So I am out and waiting for another entry that makes sense.  I am still in some metal mining companies actually in three a gold , a silver and a platinum company. 
Gold is also in a state of indecision.  After attempting to break the key 1300 level, it has fallen back to regroup. The metal is over extended so a pull back is expected however depending on the other markets, gold may just hover in the 1285 - 1300 range and correct through time.   What we are still seeing in this market is gold being pushed down during North American hours only to be bid up in the Asian markets.   Remember seasonality is in favor of gold right now.  For key level of 1300 to be take out with strong volume will only occur when either the QE2 is announced, more global instability occurs, or more currency war talk.

Gold is so high because the countries are in a race to the bottom as most believe that the way to beat this recession is to stimulate their export market via devaluation of the currency.  Japan recently intervened, China has not allowed the Yuan to gain value quickly, and the US has been engaging in QE. 

When my article for a school paper is posted I will post the article here.  The topic is on how Mr. Keynes' name has been dragged through the mud unjustly. 

Properly entitled:  "Is John Maynard Keynes turning in his grave?"

Stay tuned.