Today will see a continuation of the assignment from George that started on November 12, 2014. He provided a catalogue of uranium stocks and exchange traded funds he wanted evaluated in light of an analyst forecast of an increase in the price of uranium to $50.00 per pound within the next twelve months.
Today’s selection is Cameco Corp. (CCO TSX & CCJ NYSE). CCO is the biggest publicly traded uranium company in the world and was the second largest producer during 2013 with 15% of world output.
This will be the second time that I study the case for CCO. The last was on September 24, 2012 for a reader with the handle of ” Scarred in Cambridge”. The shares were trading for $20.69 and the research indicated that investors could expect more selling with a retest of support at $20.00 on the horizon. In retrospect that was the right call. The stock failed to hold support and broke down to a low of $16.84 by November of 2012.
A examination of the charts will form the basis of an update on these shares.
The three-year chart exhibits many of the same features of Uranerz Energy Corp.(URZ TSX) and Ur-Energy Corp.(URE TSX & URG NYSE) which were analyzed previously. The first similarity is the Q1 2014 spike in this case to a 52-week high of $28.58 on news that Japan would restart its atomic energy power plants to curtail the cost of imported fossil fuels. The move higher began in October of 2013 as the MACD and the RSI signalled a buy off as the stock bounced off support at $18.00.
As illustrated in the previous two studies the Q1 pop was followed by a Q2 drop. CCO fell to a 52-week low of $17.60 by October 2014 where the MACD and the RSI signalled another buy.
What is also evident on the chart is that CCO has offered lots of opportunities to trade for profit.
The six-month chart depicts the buy signals generated by the MACD and the RSI with CCO bouncing off the 52-week low as it moved out of an oversold situation. What is also evident is the resistance along the 200-day moving average that put a halt to the October advance. Finally you want to be aware of the support along $20.50 that could set the stage for another attempt to start another leg up.
Make it a profitable day and happy capitalism!