For a stock that has been trending down consistently for so...

For a stock that has been trending down consistently for so long, the relief rallies often introduce a psychological bias which keeps holders sucked into the trade.

Lynas is a great example of this, whereby it has its small rallies (like today), which convince holders that the story is back on track. However it NEVER manages to recover recent highs, instead as soon as it gets near previous levels the stock is hit by a wall of supply pressure. The reason for this wall of supply pressure is that despite what people will say in public, there are a lot of retail investors trapped in the stock who will take any small recovery in the share price as an opportunity to reduce some of the pain and sell (and until this clears we will not see a breakout happening any time soon).

These small corrections and smaller recoveries are a dangerous position because the moves on any given day are not enough to shake people out properly (and force proper risk management such as a hard stop loss). Over the long term however the impact to the share price can be devastating. For example if a share price goes down 2% and then up 1% for a period of 134 days, then the share price will have fallen 50%.