6 Short Cover Rallies to Avoid at All Costs

Molycorp

Click to Enlarge Rare-earth darling Molycorp (NYSE:MCP) is close to a 50% return from its November lows as short sellers scrambled to cover their profitable positions.

This stock has fallen off of the cliff in 2012, declining 65% as demand for their products has dropped. Don’t expect to see the market drive prices much higher, though, as significant overhead resistance is in place at $8.82.

Don’t buy the pop here — I expect to see MCP trade back toward its lows of around $6 again.