Time To Sell Rare Earth Stocks Short? (MCP, REE, SHZ)

The buzz surrounding rare earths minerals has turned into a speculative frenzy in the last few days as the Chinese announced export quota cuts. At this point, however, things look overdone, and many of these names may be setting up for a quick fall. Names such as Molycorp

, Rare Element Resources

, and China Shen Zhou Mining & Resources

are soaring on ridiculous volume today. SHZ is up 40% right now. Needless to say, this is not sustainable. Furthermore, most of these rare earth companies are in the development stage and didn't earn even a nickel in 2010. While some of these stocks may be promising, their ascents appear to be driven by little more than hype and speculation. Traders who have been aggressive enough to bid these stocks up may want to take some chips off and bet on an imminent fall. At the very least, if you are still looking to get long, wait for a better entry point.