Two Short-Term Swing Trades

My plan this afternoon is to look at the charts of Rare Element Resources (REE) and Molycorp (MCP). I like these names for very short-term swing trades. I am a buyer of both, with a few more dollars going into REE. I'm looking for $1.60 on REE and $3.20 on MCP. A close below $1.20 or $2.65, respectively, means I'm wrong on the long side and should exit the trades for a loss. I am a buyer based on the price breakout, along with the momentum pushes seen in the RSI and CCI on REE, as well as the CCI on MCP. This is my thesis. There isn't anything fundamentally exciting other than miners are getting some play.

REE Source: StockCharts.com View Chart » View in New Window » MCP Source: StockCharts.com View Chart » View in New Window »

But that brings me to another point on stops. These are cheap enough names that they are like options. I could see someone buying the stock like an option, waiting until zero for a stop, especially if you are looking at fundamentals. But does every stock or trade need a stop? (I posted the question on Twitter as well.) I don't think so. If you are a value or fundamental investor, then your thesis is likely longer term. If fundamentals change, or a key value metric is reduced, a re-examination of the holding should take place and a stop likely implemented -- but that is my view. From the technical side, I believe a trade should always have a stop whether it is based on a price trigger, secondary indicator trigger, or even a time stop. ...129 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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