Uranium stocks setting up for a BUY

This weekend I wanted to go through some uranium miners I see coming into potential buy zones, with oversold technicals. I’m not buying these just yet, but I am getting my list ready to put into action. Regarding uranium miners, some like Rick Rule are very positive on the group. While he is well known for his expertise in resource markets, and remains a staunch bull on the precious metals, he makes it clear that a dart-throwing selection process has a far higher probability of success in the uranium miners (roughly 8 out of 20 are investable- about 40% of the group), than it does in the precious metals miners, where we are lucky if 10% of a much larger group are worth our time and investment. That is not to say that precious metals miners are not lucrative when we do out homework, but the uranium sector is much “easier”, and our odds much better, if we have timed our macro calls well. Let’s look at some charts, and keep in mind that the only uranium stock I own at the moment is UROY (Uranium Royalty Corp.). I did own CCJ (Cameco Corp), but cashed out with good profits a few months ago. Now that it’s correcting, I am waiting for a good window to get back into CCJ along with the following uranium stocks.

Notice that most of the charts to follow look similar in how they have made recent new highs, and now pulling back in a correction, just like the URNM etf. Each chart of a different stock will have it’s own areas where I might look to start a position. Some will be near their 200 day moving average, others might be nearing a 50% fibonacci retracement or some other important technical level, etc. The point is when it’s time to start getting involved in a sector, as defined by the leading etfs in the group nearing a buy signal, I start looking for points on each individual stock’s chart to pick my areas to start buying. Then, I continue to look for windows to add until I get up to a full position, as defined by my Total Risk (TR) level. I might buy all, or just one of the following, depending on what happens near term, on what the market offers me. Let’s look at some individual uranium stocks to see what buy signals might present soon.

I already cashed out with great gains on Cameco (CCJ) once in this bull market, but I intend to do it again. I will likely use the LEAP call options again, as they worked so well the first round. CCJ is the “easy” play, if anything in this business can be considered easy! Still, I will wait until the URNM etf is on BUY signal before taking a position. If I can only own a few uranium stocks, the URNM etf and CCJ will be among my holdings.

Uranium Energy Corp (UEC) has a similar chart to CCJ in that they have both made new 52 week highs recently, and are now retreating, but UEC is more volatile so pulling back harder. It’s not my favorite uranium stock as far as fundamentals, but any stock that has corrected close to 50% after making new highs, and in a leading group, will get my interest and energy to look into it further. UEC is on my list of potential buys.

Dennison Mines (DNN) is another uranium stock that looks to be experiencing a normal, expected correction in a bull market. The percentage moves offer lots of potential risk and reward, when one considers the 52 week high was $1.80 just a few months ago, and now the stock sits under a dollar. That is a 44% correction already, and equally important is the 200 day MA is only a little lower at 88 cents, from Friday’s closing price near $1.00. You will notice the MACD indicators are oversold on these charts too, usually along with the stochastics. With most of the stocks mentioned in this post, I will start by putting in lowball offers since we don’t have a full buy signal yet on URNM, hoping to get some lucky fills form a panicked trader on the wrong side, looking to exit at any cost. 🙂

Nexgen Energy (NXE) shows similar price action in the chart as the others I have to take a moment to say these are the best setups in my opinion, when stock after stock in a sector are sporting similar technicals and chart patterns. Here we see NXE is also possibly going to approach its 200 day MA. On any individual uranium stock, I might start acquiring shares at any moment now, as they are not only nearing supports, but also confirming the action in each other. Member have full access to my ACTUAL positions, sizes, stops, and unrealized gains and losses, just look into the tabs above.

UEX Corp is even closer to it’s support than the prior stocks mentioned. It has more potential risk, but also possibly more reward. The way to play a name like this is to adjust my position size based on the ATR (average true range). I like this one because it’s another stock in the group that has corrected 45% already, AND just made new 52 week highs a few weeks ago in June! We can benefit from the late chasers who bid the stock up in June, and are now sitting a a big loss, worried about what the next week or two might bring. I will start by putting in low-ball bids on Monday, and know that I likely have time to acquire my uranium stocks, I don’t have to chase, I can wait for them to come down to me at my bid levels, or near the 200 day MA’s, etc.

Fission Uranium is not only pulling back like the others to its 200 day MA, we can also see that area coincides with old resistance, which is now support) in the 38 cent level. This and UEX are more speculative names, so be sure to size your positions correctly according to your risk tolerance. Position size is the single more important factor in a trader’s results, members can learn more about how I determine correct position sizes for my system in the tabs above. I won’t likely bet too heavy in FCUUF or UEXCF to start, but I could end up buying a lot if the trades are working well for me after I get involved, as I like adding to winning trades.

The last uranium stock I’m going to mention today is UROY, which readers have seen mentioned a lot lately in recent posts, as it’s the only uranium stock I own at the moment. Being a royalty company, it should have less risk than outright miners with their concentrated, capital intensive investments. We can also see in the chart that while UROY is pulling back with the group, it is not dropping as harshly, nor is it as close to its 200 day MA yet as the others. I WILL BE ADDING TO UROY, probably before I buy the others, since it is acting better and I will be adding to a winner on it’s pullback, my favorite trade setups. Like with the others, I will put in lowball offers this week and wait for fills to come to me. If I don’t get many fills, I can always decide on which stocks I will pay the current price, UROY is one I would be ok doing that, but I still think I might be able to get it cheaper, maybe close to its 200 day MA. That is down near $2, and while 50 cents further decline does not sound like much, its still a 20% drop from here, so patience is a virtue!