This Sector is Breaking Out; 3 Ways To Play It

Despite the uranium spot price being at an 18-month low several uranium stocks began to break-out from mature basing patterns last week. Cameco (CCJ), the keystone name in the uranium space, was the most notable gainer on the week with an increase of more than $500 million in market cap:

 

CCJ (Weekly)

CCJ_Weekly_3.19.2016

CCJ finished the week with an 11.26% gain and closed right at its falling 50-week moving average which has contained the last 3 significant failed counter-trend rallies. Moreover, the weekly RSI(14) has moved up to an area (50-60) in which recent rallies have run out of steam. Last week’s high volume bullish engulfing candlestick was also quite noteworthy. There is an open gap up at $14.09, however, we will want to see a weekly close above $14.50 before proclaiming that the bottom is in and a new uptrend has begun.

A couple of smaller uranium explorers (FCU.TO and NXE.V) are also exhibiting notable bullish technical patterns:

 

FCU.TO (Daily)

FCUFCU is testing its falling 200-day moving average for the first time since last summer. Last week’s high volume advance sets the stage for a much larger test of the .82-.86 resistance zone – a breakout above .86 would target  C$1.10+

NXE.V (Daily)

NXE.V

NXE has actually added to the gains from the parabolic surge at the beginning of March. The recent consolidation between 1.30-1.50 is an indication that buyers are loading up on small dips and sellers aren’t motivated to unload shares despite the large share price increase in recent weeks. 

Something is brewing in the uranium sector and CCJ, FCU, and NXE are worth keeping a close eye on over the coming weeks. To find out how i’m trading these stocks and others come check out the premium Trading Lab at CEO.CA.