Rare earths stock MP Materials Corp (NYSE:MP) has had a volatile year, though still sporting a 9.8% year to date gain. Most recently, the shares have pulled back to support at the $55 region, as well as the 320-day moving average, a historically bullish trendline.
According to Schaeffer's Senior Quantitative Analyst Rocky White, MP is trading within 0.75 times the 320-day moving average's 20-day average true range (ATR), after spending at least 80% of the previous two weeks and 80% of the prior 42 trading sessions above that trendline. This setup has appeared four times over the last decade, after which the stock was higher one month later 100% of the time, averaging a large 12.2% gain. A similar move from the stock's current perch at $55.45 would rise to $62.21.
Short covering could provide an added tailwind, as short interest represents 19.6% of the stock's available float. It would take shorts nearly five days to buy back their bearish bets, at MP's average pace of trading. Plus, the stock sits in "oversold" territory, per its 14-day relative strength index (RSI) of 27.
