Summary
- Geiger counter going off after decade-long decline.
- Similar patterns of 2020 lows argue for larger moves just starting.
- We highlight some of our favorites from the sector.
- Looking for a helping hand in the market? Members of Stock Waves get exclusive ideas and guidance to navigate any climate.
In our weekly Stock Waves webinar this past Thursday, we took an in-depth look at the Uranium sector starting with the Global X Uranium ETF (URA). And then after looking at its main components and other stocks in the nuclear energy space, we refined that list into the highlights we are sharing with you here. This is what we do almost every Thursday. We go top-down into detail on a specific sector and highlight the best charts. From an Elliott Wave standpoint, we prize clear wave structure following EW guidelines and hitting good Fibonacci proportions on liquid and established charts. We may discuss and provide analysis on things that do not fit that mold showing more outlandish percentage gain potential but prefer charts that we can have confidence in a higher probability of success.
Uranium stocks spent a solid decade in a downtrend. And while March 2020 continues to prove to be a significant bottom for many stocks it’s likely a very significant bottom for this sector. We began to highlight some of these stocks in the fall as they came into retrace targets for the wave (2) following the strong impulsive move off the March 2020 lows. At that time Lyn Alden Schwartzer started to post about long-term uranium potential from the fundamental side. In October she did one of her Deep Dive Analyses on the Uranium Market and Nuclear Energy. She followed that up with a Where Fundamentals Meet Technicals article for our subscribers in December.
She sees strong and increasing demand for uranium as China and other developing countries continue to increase energy consumption. Additionally since the current spot price of uranium is less than the actual production costs there is a lot of interesting opportunities for suppliers and investors alike.
As discussed, the URA chart as a strong (1)-(2)-1-2 setup off the March 2020 low that could easily fill out just the Primary degree wave 1 of an even longer term bull run. The 24 region should be the minimal next target for wave 3 inside (3).
Cameco (CCJ) or (TSE:CCO) is the largest holding and one of the charts that caught our eye early on in the reversal back in March. We follow up the five wave impulse and then were thrilled when it provided such a perfect ABC consolidation right to the top of our ideal Fibonacci retrace zone. The (1)-(2)-1-2 here plays perfectly into the P.1 of a larger Cycle degree c or III up from March 2020. This 3 of (3) minimally targets the 21 region but ideally stretches toward 23-26.
NexGen Energy (NXE) we chose to highlight because not only does it similarly display the strong (1)-(2)-1-2 setup, it’s also clearly acting like a breakout past resistance into the 3 of (3) slightly ahead of its peers. The min target for 3 of (3) is 6.25 with extension to 8.60 possible before the consolidation as 4.
Uranium Participation Corp (TSE: U) is one of Lyn’s favorite vehicles in this space. More of a pure uranium play vs. a miner. The three should minimally target the 100% extension of (3) next at 6.76 CAD but could easily extend to 7.67.
Uranium Energy (UEC) also is high on our list, although the (1)-(2)-1-2 here seems to fit better inside a Primary C wave off 2020. As discussed in the video the “1” of (3) got past ideal limits so if this is 1-2 of (3) like the others the 3 should head toward 6.13, but we will be on alert for this to get snagged in the 3s as normal resistance for a 3 of (3).
The next two names count further along inside their respective (3)s but still have solid patterns and could see nice extension in the 5ths of (3) while the other runs hard in the 3s. Energy Fuels Inc (TSE: EFR) and especially UR-Energy should be just starting the 5th waves of (3).
Fission Uranium Corp (TSE:FCU) like URA is working off a long term correction into an All Time Low, but has the same clean (1)-(2)-1-2 structure and like NXE & UEC is nicely over the top of 1 confirming a breakout in the heart of the 3 of (3). The 100% of (3) is at 1.25 and the 123.6% is at 1.87, these are the two most probable Fibonacci extension targets for wave 3 inside (3).
As I write this Lyn posted yet another awesome update on the fundamentals in this sector and how well they support the price targets projected in our charts.
With a few of these names starting to confirm breakouts and CCJ flirting with the pivot over resistance too, we have a critical mass of bullishness ready to set off a chain reaction for continued explosive moves. The gamma rays coming off this fissile material might be too hot for some investors to hold but we will be following all safety protocols in the Stock Waves room, venting gases at resistance and pushing rods back in at supports along the way. #Radioactive
Source: Seeking Alpha