politics · Tuesday, June 9, 2026 · 4 min
Buy MP Materials at $54.30 after Congress voted to break China's rare earth chokehold
Rare earth miner MP Materials crashed 24.83% to $54.30 today on rumors of a US x China rare earth trade deal, on the same day the House passed a bipartisan bill to permanently fund a US-and-allies alternative supply chain. The market sold the wrong story.
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Aim for $61.30: 50-day moving average and the price MP traded around for most of May before the China deal rumor
Aim for $72.24: yesterday's closing price, the level the stock held before today's gap down
Why this size: Risk 0.5% of your account if MP closes below $49.80. The sell-if-it-goes-against-you level is 8.3% below today's $54.30 close, so position size = 0.5% / 8.3% = 6% of your account. That is below the 10% single-name cap, so no further trim needed.
When you'd hold this: 4 to 8 weeks, around next quarterly earnings filing expected late July, DOMINANCE Act moves to Senate in coming weeks
Congress and the stock market disagreed sharply yesterday and today about what is happening to America's rare earth supply chain. The House passed a bipartisan bill that locks in years of government spending to break China's grip on the metals that go into electric vehicle motors, fighter jets, and iPhone speakers1. The next morning the biggest US rare earth miner dropped almost 25% on a rumor that the US and China are about to make a deal on those same metals. Both stories cannot be right. We think the market sold the wrong one.
What just happened
On Sunday June 8, the House of Representatives passed HR 7037, called the DOMINANCE Act1. The bill creates a new office inside the State Department whose job is to sign multi-year supply deals with allied countries for rare earth metals, lithium, and other critical minerals. China today controls about 70% of the world's rare earth mining and roughly 90% of the processing2, so any serious push to build an alternative needs years of public money behind it. That money is what this bill authorizes.
The next trading day, MP Materials, the largest US rare earth miner, fell from $72.24 to $54.30, a 24.83% one-day drop. The smaller player USA Rare Earth fell 31.92% to $20.90. The rare earth basket fund REMX fell 13.85%. The catalyst was reporting that a possible US x China trade deal could include China loosening rare earth export curbs3, which would lower the scarcity premium that has been holding these stocks up.
There was also a second pressure point on MP specifically. Filings show MP's chairman has been selling shares through a trust over the past several weeks, with a fresh form covering 150,000 shares on top of 300,000 sold earlier4. Most of those sales are pre-scheduled, but the optics of insiders selling at the same time as a China headline made institutional holders take profit faster.
So what
Here is the chain a normal reader would not stitch together on their own.
One, the China rumor is a single-day news event. The DOMINANCE Act is a multi-year program with a Bureau, a budget line, and bipartisan support. A trade deal could be reversed in a tweet. A federal bureau is a lot harder to shut down.
Two, MP already has the floor that the China rumor is supposedly removing. Its 10-year contract with the Department of Defense puts a roughly $110 per kilogram price floor under the metal it produces5. It also has a $500 million partnership with Apple to supply magnets and a $400 million Department of Defense package for a Texas magnet plant5. None of those agreements get cancelled if China decides to ship a bit more cerium to Europe.
Three, the same bill that passed yesterday actively makes MP's contracts more, not less, valuable. The State Department compacts the bill creates will steer allied government buying toward producers like MP that are already integrated with the US defense supply chain. So the structural buyer just got bigger, even as the spot price headline got worse.
Four, the price you can buy MP at today is below where it traded in mid May, and the company that owns the floor price contract has not changed in 48 hours. Only the headline has.
What to do about it
Buy MP Materials at around $54.30, and do not pay more than $58 for it. Plan to sit in it for 4 to 8 weeks while the DOMINANCE Act crosses to the Senate and the China rumor either becomes a real deal or fades. If MP closes below $49.80, get out, because that means the March low has broken and the structural-buyer story is not enough to hold the floor.
The risk to be honest about: if a US x China deal actually gets signed and includes a guaranteed flow of Chinese rare earth exports back to US buyers, the scarcity premium does come out of these stocks for a while. That is why this is a 6% position, not a 15% position. If the rumor turns into reality, the loss is contained. If it fades, the bill is still law and the Pentagon is still buying.
For exposure with less single-name risk, the rare earth basket fund REMX (an exchange-traded fund that is a basket of related stocks you can buy as one ticker) is the safer cousin. You give up the Apple and Pentagon-floor optionality, but you also give up the insider-selling headline risk.
What we got right (and wrong) before
Three days ago we published a buy on Southern Copper at $170.48 after Peru elected a pro mining candidate. That was the same playbook: a political event that the market under priced because it sat in a different feed than the daily price action. Different metal, different country, same idea. We have no closed rare earth call yet, this is the first one in the basket.
For the nerds
MP closed at $54.30, down 24.83% on the day, range $52.42 to $58.62, volume 8.87M. 14-day relative strength index 49.27 (neutral), MACD histogram -1.18 (bearish), 50-day moving average $61.31, 200-day $62.62, so the price is below both averages and the 50-day has crossed below the 200-day. Prior swing low was $50.60 on March 20; the stop sits below it at $49.80. REMX relative strength index 43.47, MACD histogram -1.40, 50-day $98.15, 200-day $82.39 (the 50-day uptrend over 200 is still intact for the basket).
Macro backdrop, for context only, not new to this thesis: 10-year Treasury at 4.56% (FRED DGS10, 2026-06-08), Crypto Fear and Greed at 10 (extreme fear), VIX 18.92 (FRED VIXCLS, 2026-06-08). DOMINANCE Act is HR 7037 in the 119th Congress, sponsored by Reps. Young Kim (R-CA) and Ami Bera (D-CA), passed under suspension of the rules on 2026-06-08.
Not financial advice. Do your own research.
What we passed on
- $USARPENDING0.0% since pass
USA Rare Earth fell 31.92% to $20.90 today, more violent move than MP but no Department of Defense price floor underneath it. Higher risk, less proven cash flow.
- $UUUUPENDING0.0% since pass
Energy Fuels mostly mines uranium with a small rare earth side business. Today's 26.46% drop to $14.37 was driven by the same headline but the rare earth thesis is weaker here.
- $REMXPENDING0.0% since pass
Rare earth basket exchange-traded fund (a basket of stocks you can buy as one ticker) fell 13.85% to $88.03. Safer than picking a single name but you give up the Apple and Pentagon partnerships that make MP the cleanest bet.