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 Bottom Update

Commodities / Uranium Apr 16, 2008 - 10:56 AM GMT

By: Jordan_Roy_Byrne

Commodities Best Financial Markets Analysis ArticleTwo months ago I penned an editorial calling bottom on the uranium stocks. Technically I saw many stocks deeply oversold yet positive momentum was starting to build. A few months later and the positive momentum divergences have continued to build. A few U stocks did indeed bottom but more have made slight new lows. While we need price to confirm a bottom it is important to note that forming significant bottoms can be a timely process.


Last update I looked at the relative weakness of uranium against both commodities as a sector and energy prices as a sector. Using Uranium Participation Corp (U.to) as my proxy for uranium prices (because it tracks the U price well) it was obvious how oversold the sector had become. In the last two months the sector has become even more oversold as natural gas and oil have continued to rise. I don't think that should deter investors. Despite being in a bull market, energy commodities haven't been immune to sharp corrections.

The following chart shows U.to, Oil and Natural Gas.

Natural gas endured a 73% decline but is on its way towards a retest of $15. Oil declined 38% and was able to make a new high just 15 months later. Oil also declined 54% in 2000 and 2001. U.to has fallen about 60% while the spot uranium price has declined roughly 50%. Normal is not the best word to describe the uranium correction but investors should take heart that both oil and natural gas more than rebounded from similar major price declines. If the fundamentals for the energy bull market are still intact, then the uranium price and uranium shares should rebound strongly as we move into next year.

There isn't a great uranium exchange traded fund nor is there a basket of large caps to accurately track the sector. There is the 800-lb gorilla, Cameco. The price action of Cameco is encouraging to me. Let me explain the chart below. In the main frame we have Cameco/S&P 500 and below that we have the S&P 500 and Cameco.

While a slight underperformer against the market, Cameco has remained healthy in technical terms. You can see positive momentum divergences developing which is a sign that Cameco should soon regain relative strength against the market. Most important is this. The stock market has broken below its many supports from late 2006 to 2007. Cameco has not. It is possible that Cameco might fall below that support in a “bear trap” or “fakeout” type move. If the fundamentals of uranium hadn't remained solid during this price correction then we would have expected to see Cameco's stock sliding more.

Lastly, below is a daily chart of the Smartinvestment.ca junior uranium index.

If you peer in closely you will see that it appeared a double bottom was formed back in February at 4,000. Over the past 16 days the index has fallen slightly below 4,000 but has tried multiple times to rise above. I believe once the index closes above 4,000 on consecutive days than a short to medium term bottom will have been reached. Moving further out one has to like the positive divergences in both the Macd and Rsi indicators. Also bullish is the falling wedge that has intensified in recent months.

As the commodity bull rages on amidst a global economy fraught with risk and increasing uncertainty, investors need to increasingly consider the potential downside of investments. I would argue that at the current juncture the downside risk in uranium shares is much smaller than the downside risk in most other commodity shares.

For technical analysis of specific uranium stocks, visit my website where a premium report can be purchased.

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

B Blick
19 Apr 08, 22:21
No Uranium ETF

You mention that there is no ETF for uranium and you are quite correct, however, the closest I could find in a diversified small cap stock is Pinetree Capital which has several uranium stocks in its basket plus a good selection of other resource and mining stocks.

Look 'em up... PNP on the TSX.

And here is a link to their sector stock list.

http://www.pinetreecapital.com/sector.asp


Post Comment

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