Energy Fuels Inc. has been selling off since March of 2014

Sep 23rd, 2015 – 1 Comment

A prime example of why you should avoid averaging down


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Lou Schizas is an equities analyst, investor, entrepreneur, professor and television and radio personality – and a true believer in the happiness-inspiring powers of capitalism.


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EFR Logo

Hello Lou,

I am writing to find out whether Energy Fuels has any chance to recover. Averaging down has not been any help. Your comments would be well appreciated.

Thanks,
Varghese

 

Hey Varghese,

Thanks for the assignment. This will be the second time that I put a scope on the charts for Energy Fuels Inc. (EFR TSX). The last time was on November 21. 2014. George had tasked me with a review of a number of uranium stocks and exchange traded funds based on an analyst calling for $50 per pound for yellow cake within a twelve month period. EFR was trading at $8.60 having caught a bounce off of $6.25 in October of 2014. It was advised that the stock needed to be monitored to verify that it could hold support along the 200-day moving average and continue to move higher.

Unfortunately the price of uranium failed to reach $50.00 per pound and the stock retreated from resistance near its 52-week high of $9.00. The decline took the shares to a 52-week low of $3.74 in August of 2015.

You mentioned not having been well served averaging down on your position. I generally don’t recommend taking that course of action. The best time to average in is when a stock is going up.

Another inspection of the charts will form the basis of my opinion.

 

 

EFRThe three-year chart exhibits a number of patterns that would make this a stock to avoid. EFR has been selling off since March of 2014 and in addition has been labouring under a death cross since June of the same year. The shares broke below the 200-day moving average in late November of 2014 which was followed by a breach of the 50-day moving average in late December.

Also worth noting is the resistance along the moving averages through 2015.

 

 

 

 

EFR2

The six-month chart highlights the resistance along the moving averages and the resistance that has formed near $4.50. At this time there is no evidence to suggest that we might expect a trend reversal.

You might want to consider a tax loss sale as we approach the end of the year.

 

 

 

Next time I will examine the Bank of Nova Scotia (BNS TSX) for Victor.

 

Make it a profitable day and happy capitalism!

 

 

 

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