Back in December my good buddy Eric Jackson who you may know from Stocktwits, Forbes and Bloomberg, asked me and some other folks for their favorite short and long idea for 2012. My favorite short for the year was Molycorp $MCP and my favorite long was Walters Energy $WLT.
So far $WLT is doing well. The Bernanke has rates right where he wants them and coal and energy are popping. Takeover chatter also seems to constantly surround the name and the chart looks terrific. As you can see in the chart below, the stock broke out of a downtrend (white line) on January 11 on big volume. That is what you want to see in a potential “bottom”, as long as volume validates it. In this case it did and the stock just continued higher. The 200 day moving average is up around 87 bucks. The stock may need a rest though.
$MCP developed a big head and shoulder pattern in 2011. That is a weekly chart below. It broke the neckline of that pattern on March 23 and since then all it has really done is develop a few bear flags. Actually it’s currently on its third flag since breaking the neckline. I see lower prices by year end, but there is still much time to make me look foolish on both. Good trading.
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