Institutions bought $150m of stock @ 75c because they expected to make a profit on it day 1. They did not expect to lose a considerable amount on their purchase, particularly when the project was finally considered de-risked. In addition to losing money they have given up a lot of profit on everything else they could have bought, as Lynas is one of the few shares that have lagged this rally over the last few months. Hence when they get back to breakeven they will get out of the stock and 75c is therefore a wall of supply.
Finally retail brokers as a % of this stocks turnover have been going up and not down the last few weeks. That means even more speculative buying from short term accounts that cannot take volatility because they are trading on leverage and have to sell out at the first sign of trouble. Such as has happened the last few days, shares fall a few cents and everyone panics for the doors which means the share price impact is even greater. Alas the sad thing about all of this is the behaviour is telegraphed so strongly to bots so they can pick off the weak retail hands once again.
Given this low quality buying of the last few weeks, it appears likely the shares will re-test the lows, before another positive fundamental announcement helps them recover again.
LYC Price at posting:
65.0¢ Sentiment: LT Sell Disclosure: Not Held
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