LaDucTrading

Fishing Idea: Uranium

Back on Wednesday November 8th when the Uranium ETF $URA was ~$12.50 I referenced the morning star reversal that was forming on the Weekly chart and what a nice trade it would be long as it looked ready to break out above that rather long-term descending trend-line. It was a LRE (low risk entry) on weekly support and had a good chart. I had no idea it would gap above and run to the 200D THE NEXT DAY.

I did know that about 90% of Uranium comes from Russia and relations with the US have been deteriorating so when this relatively illiquid and under-the-radar ETF exploded, I figured something was up, but I had no idea what it was.

As it turned out, Cameco Corp (CCJ) decided to suspend production and they are the world’s largest uranium mine. This wasn’t a total surprise since the price of the commodity had been trading below the cost of production. But they were the first.

According to BMO the uranium market suddenly faces a much greater than previously forecast under-supplied condition in 2018 and based on volumes of buying, it appears institutions saw this and are beginning to bet on a turn in the uranium sector which includes CCJ and NXE.TO.

Add to that, the uranium sector has a tendency to erupt in early November each year.

A well-reasoned although excitable piece on the Value Proposition of Uranium comes from Kevin Muir:

Yeah, it’s an ugly industry, with terrible looking fundamentals – but that’s why it is SO CHEAP. If it wasn’t scary looking, it wouldn’t be an opportunity.

And now I see all kinds of attention on this space…

With that, Uranium — commodity, stock, or ETF — looks to be in the early innings of a Chase that turned into a Swing and now looks very close to turning into a Trend-Long.

Happy Trading,

Samantha

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