Most Popular
1. THE INFLATION MONSTER is Forecasting RECESSION - Nadeem_Walayat
2.Why APPLE Could CRASH the Stock Market! - Nadeem_Walayat
3.The Stocks Stealth BEAR Market - Nadeem_Walayat
4.Inflation, Commodities and Interest Rates : Paradigm Shifts in Macrotrends - Rambus_Chartology
5.Stock Market in the Eye of the Storm, Visualising AI Tech Stocks Buying Levels - Nadeem_Walayat
6.AI Tech Stocks Earnings BloodBath Buying Opportunity - Nadeem_Walayat
7.PPT HALTS STOCK MARKET CRASH ahead of Fed May Interest Rate Hike Meeting - Nadeem_Walayat
8.50 Small Cap Growth Stocks Analysis to CAPITALISE on the Stock Market Inflation -Nadeem_Walayat
9.WE HAVE NO CHOICE BUT TO INVEST IN STOCKS AND HOUSING MARKET - Nadeem_Walayat
10.Apple and Microsoft Nuts Are About to CRACK and Send Stock Market Sharply Lower - Nadeem_Walayat
Last 7 days
Qualcom Stock Market Harbinger - 12th Aug 22
Apple Exec Gets World's 1st iPhone 14 for Daughters 14th Birthday Surprise Present Unboxing! - 12th Aug 22
Steps to remember while playing live roulette online - 12th Aug 22
China Bank Run Protests - Another Potential Tiananmen Square Massacre? - 11th Aug 22
Silver Coin Premiums – Another Collapse? - 11th Aug 22
Gold-to-Silver Ratio Heading Lower – Setup Like 1989-03 - 11th Aug 22
Severe Stocks Bear Market: Will You Be Among the Prepared 1.5%? - 11th Aug 22
There's a Hole in My Bucket Dear Liza, UK Summer Heatwave Plants Watering Problem Song - 11th Aug 22
Why PEAK INFLATION is a RED HERRING! Prepare for a Decade Long Cost of Living Crisis - 9th Aug 22
FREETRADE Want to LEND My Shares to Short Sellers! - 8th Aug 22
Stock Market Unclosed Gap - 8th Aug 22
The End Game for Silver Shenanigans... - 8th Aug 22er
WARNING Corsair MP600 NVME2 M2 SSD Are Prone to Failure Can Prevent Systems From Booting - 8th Aug 22
Elliott Waves: Your "Rhyme & Reason" to Mainstream Stock Market Opinions - 6th Aug 22
COST OF LIVING CRISIS NIGHTMARE - Expect High INFLATION for whole of this DECADE! - 6th Aug 22
WHY PEAK INFLATION RED HERRING - 5th Aug 22
Recession Is Good for Gold, but a Crisis Would Be Even Better - 5th Aug 22
Stock Market Rallying On Slowly Thinning Air - 5th Aug 22
SILVER’S BAD BREAK - 5th Aug 22
Stock Market Trend Pattren 2022 Forecast Current State - 4th Aug 22
Should We Be Prepared For An Aggressive U.S. Fed In The Future? - 4th Aug 22
Will the S&P 500 Stock Market Index Go the Way of Meme Stocks? - 4th Aug 22
Stock Market Another Upswing Attempt - 4th Aug 22
What is our Real Economic and Financial Prognosis? - 4th Aug 22
The REAL Stocks Bear Market of 2022 - 3rd Aug 22
The ‘Wishful Thinking’ Fed Is Anything But ‘Neutral’ - 3rd Aug 22
Don’t Be Misled by Gold’s Recent Upswing - 3rd Aug 22
Aluminum, Copper, Zinc: The 3 Horsemen of the Upcoming "Econocalypse" - 31st July 22
Gold Stocks’ Rally Autumn 2022 - 31st July 22
US Fed Is Battling Excess Global Capital – Which Is Creating Inflation - 31st July 22

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Uranium Stocks Hit Bottom - Time to Buy?

Commodities / Uranium Feb 20, 2008 - 11:04 AM GMT

By: Jordan_Roy_Byrne

Commodities Best Financial Markets Analysis ArticleOver the past six months Uranium stocks had fallen completely off the radar. It had been months since I last wrote about them in my newsletter. Such can occur when a major peak develops and devastating declines ensue. The combination of the subprime mortgage meltdown and ensuing credit crisis combined with a rapid 40% decline in the spot uranium price inflicted collateral damage on the entire sector. Only a few stocks were able to avoid more than a 50% decline. However, over the past few weeks selling pressure has finally abated and given way to classic bottoming patterns in many of the uranium stocks. Last week's action was especially encouraging as many stocks rebounded on rising volume from successfully tested bottom points.


Let's use Uranium Participation Corp (U.to), as our sector case study. The company owns and essentially holds physical uranium with the long-term objective of price appreciation of the asset. The stock closely tracks the actual price of the uranium, and therefore can be considered a Uranium ETF of sorts.

(Chart above) Corrections tend to occur in three waves. The pattern is down, up and down (or A-B-C). The chart shows an obvious A-B-C correction. How do we know that C has completed? We don't know for certain but there are several factors that help to confirm a bottom. First, there are positive divergences in the Macd, Rsi and Accumulation indicators. Divergences will often lead price. Secondly, over the past three weeks the stock has held nine three times and the last time was followed by a surge in volume. Third and finally, we have the aforementioned strong possibility of three completed waves (A-B-C).

Next we compare (below) U.to, to the Goldman Sachs index of energy prices. This comparison is one reflection of the uranium sector compared to the overall energy sector.

(Chart above) As you can see, the uranium sector was an especially strong performer in 2006. Yet since early 2007, the rest of the energy sector (oil, natural gas, coal) has strongly outperformed uranium. Though currently we feel that this is a time when your energy investments should be tilted towards the uranium group. There is strong evidence in the chart that uranium should outperform going forward. The U.to/GJX ratio has formed a bullish falling wedge and is also at a long-term support point. Furthermore there are positive divergences in both Macd and Rsi. Finally, the ratio is well below its 200-day moving average. That is evidence of how oversold the uranium group is compared to the rest of the energy sector.

The uranium group is not just oversold relative to the energy sector. After exhibiting tremendous leadership in the commodity group, it has fallen off the map as gold, silver and agricultural commodities have captured investors' attention. Graphing U.to against the Goldman Sachs Continuous Commodity index (CCI), we see that uranium is very oversold but ripe for a reversal.

(Above) If you look in closely you can see a positive divergence in both Macd and Rsi over the past month, as well as the divergence since August. Of course we need to see confirmation in a price reversal but given the positive divergences and the steep drop over the past year that has left this ratio tremendously oversold, we feel this is a great low-risk opportunity to add more uranium to your commodity investments.

For more information on the uranium recovery, if you go to our website you can purchase a research report which covers the current technical outlook for 17 uranium stocks.

By Jordan Roy-Byrne
trendsman@trendsman.com
Editor of Trendsman Newsletter
http://trendsman.com

Trendsman” is an affiliate member of the Market Technicians Association (MTA) and is enrolled in their CMT Program, which certifies professionals in the field of technical analysis. He will be taking the final exam in Spring 07. Trendsman focuses on technical analysis but analyzes fundamentals and investor psychology in tandem with the charts. He credits his success to an immense love of the markets and an insatiable thirst for knowledge and profits.

Jordan Roy-Byrne Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

gene tyburn
08 Mar 09, 01:11
stocks that have great potential but are in the toilet

good strong stocks that are now in the tolet.? give me the name of ten of them. thanks


Post Comment

Only logged in users are allowed to post comments. Register/ Log in