Uranium Price Turnaround – Some Technical Analysis Thoughts

by OLIVIER on APRIL 22, 2010

The title of the post is clearly derived from ‘predictive technical analysis’. What I have been preaching on my website is to stick to ‘reactive technical analysis’. Put another way, listen to the charts and wait for prices to confirm your assumptions as opposed to trading your opinions.

That being said I am starting to see increasing signs indicating we might be on the verge of a turnaround for Uranium. It is still very early in the game and we need a lot more signs confirming this assumption. In other words, a lot more stocks that are part of the Uranium Mining Stock Sector need to start moving up. As long as the sector as a whole doesn’t move up in unison buying Uranium stocks is somehow fighting the tape and is doing the ’salmon thing’. You simply don’t want to swim upstream. Something I have suggested quite a few times in the past is to buy the strongest stocks within a specific sector as a means of insurance. If the sector itself cannot move up though even leading stocks will move back down and give back all their gains. As a general rule though the strongest stocks are holding up much better than their weaker peers and are easier to exit.

KIV-V – Kivalliq Energy, one of my portfolio positions is exactly in that situation right now. Immediate momentum is more or less lost. But from a technical perspective it still is one of the best bets in the Uranium sector as it is an early leader, the trend just started, it trades near its all time high and has almost no overhead resistance.

An encouraging signal is today’s up-move with DNN / DML.TO – Denison Mines. Another stock which is making first attempts to move out of its rather long basing pattern and is refusing to go lower.BSK.V – Blue Sky Uranium started moving up a while back as Ross Beaty got involved. Recently by means of Lumina Capital he also got involved with KIV.V – Kivalliq Energy. It is definitely early, but in my book this sector is definitely worth following very closely when big hitters start taking on positions. Ultimately U.TO – Uranium Participation needs to move up again and trade above its weekly 30 moving average. Unless that happens the risk of getting stopped out with early leaders within the Uranium sector is simply greater.

Up-to-date U.TO – Uranium Participation chart on my public list.

Here’s how I closely monitor changes within the Uranium sector:

• Uranium Sector Overview Chart I.
• Uranium Sector Overview Chart II.

In life lots of people know what to do, but few people actually do what they know. Knowing is not enough! You must take action. – Tony Robbins

My public list with all my charts can be viewed here:
http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID2791469

Have a great evening!