Molycorp Stock Getting Very Oversold

In trading on Tuesday, shares of Molycorp Inc. (NYSE: MCP) entered into oversold territory, changing hands as low as $1.56 per share. We define oversold territory using the Relative Strength Index, or RSI, which is a technical analysis indicator used to measure momentum on a scale of zero to 100. A stock is considered to be oversold if the RSI reading falls below 30.

In the case of Molycorp Inc. , the RSI reading has hit 28.8 — by comparison, the universe of metals and mining stocks covered by Metals Channel currently has an average RSI of 43.0, the RSI of Spot Gold is at 34.2, and the RSI of Spot Silver is presently 28.5.

Click here to find out what 9 other oversold metals stocks you need to know about, at MetalsChannel.com »

A bullish investor could look at MCP's 28.8 reading as a sign that the recent heavy selling is in the process of exhausting itself, and begin to look for entry point opportunities on the buy side.

Looking at a chart of one year performance (below), MCP's low point in its 52 week range is $1.56 per share, with $7.78 as the 52 week high point — that compares with a last trade of $1.58. Molycorp Inc. shares are currently trading down about 1.9% on the day.

According to the ETF Finder at ETFChannel.com, MCP makes up 2.75% of the Rare Earth/Strategic Metals ETF (AMEX: REMX) which is trading lower by about 1.5% on the day Tuesday.