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The Latest on Molycorp

We're keeping an eye on Molycorp Inc. (NYSE: MCP).

The rare-earth miner surged 50% after Permanent Wealth Investor Editor Martin Hutchinson recommended it late last August. But the company has been a mess of late - with one disappointing revelation after another.

But the stock surged nearly 7% on Tuesday to close at $5.24. And several recent developments are prompting us to take a closer look.

First, the stock has reached severe "oversold" levels.

After establishing a new 52-week low of $4.86 a share on Monday, the stock has reached oversold levels - with a "Relative Strength Index," or RSI, of 24.

For those of you not familiar with the term, the RSI is a technical-analysis measure that ranks a stock on a scale of zero to 100.

Under this scale, a stock is typically viewed as "overbought" (expensive) if the RSI is at or greater than 70, and "oversold" (cheap) if the indicator is at or below 30.

And with Molycorp trading at 24, the company's stock is trading at less than "fair value" - indicating that it may be cheap.

Of course, you can't look at these indicators in a vacuum.

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