Today we saw some impressive strength in the rare earth stocks led by CRML, which gave us very early indications that this name was setting up for a higher move. Above on the left is a 5-minute chart of CRML with volume, and below that is the SPY for comparison. Right away, the relative strength stood out.
From points A to B on the chart, the SPY continued to make new lows, which is a clear sign of market weakness. However, CRML told a very different story. Instead of following the market lower, CRML put in a much higher low at point B. That divergence immediately caught my attention because it signals that buyers are stepping in despite broader market pressure. When a stock refuses to go down while the market is making new lows, it’s often a sign that institutions are quietly accumulating shares.
Another important clue was volume. If you compare today’s volume around 10:30 ET to yesterday’s volume, the difference is obvious. Volume was notably heavier today, which helped confirm the relative strength we were seeing on the price chart. Elevated volume during a higher low adds conviction and increases the odds that a meaningful move is developing rather than just a short lived bounce.
Once CRML broke above resistance at 15.20, which was the high of day at the time, the move really accelerated. The stock continued to climb steadily and eventually reached a high of 19.05 several hours later. This kind of follow through after a resistance break is exactly what you want to see when relative strength is present.
Looking at the daily chart on the right, CRML is now approaching a small gap from October 20th that comes in around 19.58. Daily volume today was heavy as well, further reinforcing the strength of this move. This is just another great example of viewing the market through the lens of relative strength. CRML is definitely a stock worth keeping on your radar in the days and weeks ahead.
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