Avalon Rare Earth Metals ( TSX : AVL ) | Materials for Clean Technology | Stock Technical and Fundmental Analysis

This is a Weekly Chart of Avalon Rare Earth Metal ( TSX : AVL ).

The stock has retraced 50% of its move and looks like it has down bottomed around that level.
The volume has been diminishing however, last weeks volume was notably higher that the previous few weeks which may be a slight hint of more players stepping into the market shortly.  The MACD has been exaggerated and is reaching the "tipping point" of 0.  Given that the stock is over sold and is finding support at the 50% Fibonacci retracement, which also happens to coincided with the 50 week moving average, it leads  me to believe a turning point is into the works over the next few weeks.  The stock is primed for a nice size bounce.  I recently picked up some September Call Options for $7.00 strike price.

Where will that turning point come? The Daily Chart above shows what might be unfolding.  A break of the trend line holding the stock lower since early April.  The MACD seems to want to pop through the 0 level which would be an indicator of the end of a downtrend.  The key is to pick a position and keep a tight stop at 5.80 ish.  Low risk, minimal downsize, large potential with geopolitics playing such an important role within this space.  Since AVL is a Canadian Company and Property, if quotas continue to be squeezed in the global supply (>90% China) then AVL is poised to become a very stable source of Rare Earth metals for Canada and the US.

Related News Links

Rare earth demand on the rise

"With an increased global focus on the introduction and sustainability of green solutions for economic growth as well as easing pressure on the environment, rare earth metals appear to have become increasingly important."

Rare elements needed for high-tech applications

"Rare earth elements are a collection of 17 elements that are critical for civilian and military high-technology applications. The rare earth elements are scandium, yttrium, lanthanum, cerium, praseodymium, neodymium, promethium, samarium, europium, gadolinium, terbium, dysprosium, holmium, erbium, thulium, ytterbium and lutetium. However, rare earth elements are not really rare. They are distributed globally, with 36 percent of known reserves in China and 13 percent in the United States."

Seagate Blames a "Bubble" In Rare Earth Prices for Causing a Margin Squeeze

"For some time now, rare earth supply, demand, and prices have been hot topics of discussion and debate. While these elements are critical components in many high-tech products, they usually represent a very small part of overall product costs. While the Japanese have clearly been scrambling to reduce their dependence on Chinese exports and to otherwise secure greater supplies, I have never heard a company complain that soaring rare earth prices were materially hurting profit margins, until now."