Shares of rare earth mineral producers MP Materials (MP) and USA Rare Earth (USAR) are rebounding Monday morning after a brutal week of profit-taking.

Both stocks had posted massive rallies in early October before undergoing textbook technical corrections – offering traders a fresh entry point into one of the strongest industrial themes of the decade.

The Pullback Was Perfectly Technical
MP Materials dropped 20% last week – right on cue for a standard correction – after rising more than 50% in just two weeks to start October.

Similarly, shares of USA Rare Earth fell 44% last week, giving back a portion of its massive 154% rally since late September. These weren’t signs of weakness. These were profit-taking events after vertical moves that needed a reset.

Now, both stocks are bouncing, MP is up 3.5% premarket, USAR is up 7.7%, and bullish momentum is returning fast.

Policy and Geopolitics Are Driving the Rebound
Rare earths are essential to the U.S. energy transition, defense systems, and semiconductor manufacturing. That makes them ground zero in the ongoing U.S.–China trade war.

Over the weekend, U.S. Treasury Secretary Scott Bessent told CNBC that the Trump administration will move to set a price floor on rare earths to combat Chinese market manipulation, an aggressive policy move that could significantly boost domestic producer profitability.

This builds on months of strategic support for the industry, including military-grade inventory stockpiling, federal investment in U.S. mining and refining capacity, and national security exemptions to fast-track projects.

Investors are quickly realizing the implications. Volume and volatility are spiking again across the space.

Technicals Back the Bull Case
Despite last week’s sharp declines, the technical setups remain bullish. Both MP and USAR have maintained their longer-term uptrends, with moving averages confirming strength. In fact, these stocks appear to be entering the early stages of a new momentum phase.

Based on the chart patterns and continued policy tailwinds, we’re targeting:

  • MP Materials (MP): $125 long-term price target
  • USA Rare Earth (USAR): $50 long-term price target

The Rare Earth Trade Bottom Line
Last week’s rare earth selloff was not a breakdown, it was a gift.

As the trade war escalates and Washington prioritizes supply chain independence, U.S.-listed rare earth producers are positioned to benefit from rising prices, favorable policy, and strong demand.

Traders should view this as a classic “buy the dip” setup in a still-developing megatrend.

— Chris Johnson

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Source: Money Morning