USA Rare Earth Surges 31%—Is This a Rare-Earth Breakout or a FOMO Frenzy?

• Shares of USA Rare Earth (USAR) skyrocketed 31.3% to $15.56, hitting an intraday high of $15.84.
• No direct news from USAR, but MP Materials’ $500M Apple partnership likely fueled speculative cross-buying.
• Trading volume spiked to 14.25M shares—18.8% turnover rate—far exceeding its 50-day average.

Today’s surge defies traditional catalysts, blending retail speculation with sector halo effects. While rare-earth peers like MP Materials (+22%) rose, most sector stocks lagged, underscoring USAR’s idiosyncratic rally.

MP Materials-Apple Partnership Sparks Sympathy Rally
The 31% surge in USA Rare Earth stock stems from indirect catalysts. Investors chased the rare-earth theme after MP Materials announced a $500M collaboration with Apple to produce recycled magnets. While USAR has no disclosed partnerships, its development of a magnet facility in Oklahoma positioned it as a proxy play. High retail volume and social media buzz amplified the move, with traders speculating USAR could be next in line for similar strategic deals. The absence of negative news—from regulatory hurdles to project delays—also allowed bullish sentiment to dominate.

Rare-Earth Sector Mixed—USAR’s Rally Defies Peers
While USAR surged 31%, most rare-earth peers underperformed. MP Materials (+22%) led gains, but Axial Energy (AXL) fell 0.9%, ALSN dipped 1.6%, and BH.A added just 0.75%. The divergence suggests USAR’s move is isolated, driven by its small-cap status ($775M market cap) and speculative appeal rather than sector-wide momentum. The broader mining sector also faced headwinds, including cobalt export bans in Congo and geopolitical risks in uranium markets, further highlighting USAR’s anomaly.

Bullish Technicals and Volatile Options Offer High-Risk Opportunities
RSI: 45.07 (neutral)
Bollinger Bands: Current price ($15.56) above upper band ($14.07), signaling overextension
MACD: Negative histogram (-0.069), suggesting short-term bearish divergence

Traders should focus on resistance at the 52W high ($20) and support at $12.63. Aggressive bulls can leverage the USAR20250725C15 and USAR20250801C15.5 calls, which offer high leverage amid elevated volatility.

• USAR20250725C15 (Strike: $15): Delta 0.61, IV 131.5%, Leverage 9.16%, Turnover $29.7K. A 5% upside to $16.34 yields a $1.34 payoff, +45% return.
• USAR20250801C15.5 (Strike: $15.5): Delta 0.56, IV 107.8%, Leverage 12.97%, Turnover $17.6K. At $16.31, payoff hits $0.81, +65% return.

Both contracts benefit from theta decay ($0.09-$0.08/day) and gamma sensitivity (0.10-0.14), rewarding directional bets. However, traders must monitor the July 25 expiration and USAR’s fundamentals—without a catalyst, the rally could reverse sharply.

Hook: For bulls betting on a sustained rare-earth boom, USAR20250801C15.5 offers asymmetric risk/reward into $16.50—just 6% above current levels.

Backtest USA Rare Earth Stock Performance
The backtest of USAR's performance after a 31% intraday surge shows mixed results. While the 3-day win rate is high at 36.11%, the 10-day win rate drops to 30.56% and the 30-day win rate falls further to 19.44%. The average returns over these periods are relatively modest, with a maximum return of 3.64% over 20 days.

Stay Vigilant—USAR’s Rally Faces a Critical Test
USA Rare Earth’s meteoric rise hinges on speculative momentum and sector halo effects, not fundamentals. With no new partnerships or milestones announced, the stock’s 31% jump risks a sharp correction if retail interest fades. Investors should watch MP Materials (+22%) as the sector bellwether—its performance could dictate rare-earth sentiment. Key levels: $12.63 (30D support) and $20 (52W high). For now, the technicals suggest overbought conditions, but options traders may exploit volatility. Action Insight: Fade rallies above $16 unless USAR announces a catalyst—regulatory approval or a strategic deal—by end of July.