On November 12, 2014 I agreed to examine a number of uranium stocks on a request from George. Today’s selection from his list is Ur-Energy Inc. ( URG NYSE & URE TSX). This will be the second time that I examine the case for URE. The previous occasion was on August 1, 2014 on a request from Amit. He had taken profits on a quarter of the position he held in Nevada Copper Corp. ( NCU TSX) and had invested the capital in URE as it traded near $1.23.
The research conducted indicated that the stock was building a base at $1.20 with further support at $1.00. There were no indications that the shares were about to breakout but that it appeared that the investment was within Amit’s risk tolerance. Unfortunately as we came into mid September 2014 URE breached support and retreated to a 52-week low of $0.83 by mid October.
Another survey of the charts will identify the opportunities associated with this investment.
The three- year chart exhibits many of the same patterns as the charts for Uranerz Energy Corporation (URZ TSX). There’s the run up in the first quarter as investors reacted to news that Japan intended to green light the restarting its nuclear reactors post Fukushima. The run up didn’t last as selling pressure increased in Q2 . The base building in the $1.20 range broke down as the stock got caught up in the market sell off that started in mid September of 2014.
The bounce off $0.85 by mid October had some fuel added to the fire as investors reacted to the November forecast of rising prices for Uranium.
The six-month chart depicts the buy signals generated by the MACD and the RSI in mid October as the shares started to move out of an oversold situation. The advance came to an end as URE met resistance at $1.20. This is a classic case of a level that once provided support forming resistance as buyers who enjoyed the bounce off of $0.85 booked profits near $1.20. At the time of this post the momentum indicators are signalling that we can expect more selling.
When the assignment from George is complete we will have a examined eight stocks and ETF’s in the uranium space and from there perhaps find the pick of the litter.
Make it a profitable day and happy capitalism!