A Focus On Uranium And Uranium Stocks – Is there still room to run higher?
Steve Penny, Founder and Publisher of the SilverChartist Report, joins us to discuss the big moves higher lately in uranium and the uranium stocks. We start off by reviewing technical levels Steve is watching in the spot uranium price on the chart. Next we focus on the price action in the uranium mining stocks using the (NYSE: URNM) North Shore Global Uranium Mining ETF as the proxy, and the support and resistance levels Steve is watching. We wrap up with a few thoughts on the chart of gold and the recent slow trading action in the gold miners and silver. All the charts we discussed are posted below.
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Thanks David. Steve P. is a sharp guy, and we enjoy getting his take on the technical setups on the charts he sends over, as well as his macro thoughts.
I’m in agreement with him here that after this epic move higher in the Uranium stocks the last few weeks and continuing into today, that it’s looking short-term pretty overbought. Medium to longer-term I’m still very bullish the sector, but I trimmed a large part of my positions back on Friday, trimmed even a bigger chunk yesterday, and did even more trimming today. My intention is to buy back any 10%-15% dips, and if we get a 20% corrective move (which seems much less likely with this rabid bid and mania hitting the U space) then I’d be loading up.
It’s a very odd feeling to now have trimmed back so much of my Uranium exposure the last few days when everyone is at extreme bullishness. I’ve had fantastic gains though, and may run the risk of selling too early in this parabolic move higher, but in my experience in trading, it’s best to lighten the load when everyone is high-fiving each other and thinking the rally will last forever. Again, this is just in the short-term, and longer term, I plan on beefing up the U portfolio again to continue higher.
Why not sell some October puts on DNN and pick up 10+% on your money. Even if DNN drops and you get put the stock, it’s gonna be a lower price.
That’s a good strategy Terry, and solid idea.
I noticed a Uranium explorer, Purepoint, that I’ve had my eye on for a while announced starting a drill program today, and sold off hard on the news. They have a few of the larger U companies as partners, and are on trend with Nexgen and Fission in that part of the Athabasca Basin. Based on the weakness in the stock today, compared to many of the more advanced companies, I decided to take out a starter position in it.
(PTU) (PTUUF) Purepoint Uranium Schedules September Drilling at 100% Owned Henday Lake
14 Sep 2021
Sprott Fund’s Buying Spree Propels Uranium Stocks To Decade High
Bloomberg News – Aoyon Ashraf – Sep 13, 2021
“Uranium stocks surged to their highest levels in a decade amid a buying frenzy by Sprott Physical Uranium Trust that’s seen it amass millions of pounds of the commodity used to power nuclear reactors.”
“Moving forward, investors are likely to focus on the sustainability of such a rally as the supply and demand fundamentals of the commodity haven’t changed since Sprott started buying.”
Red-hot Uranium Seen Cooling In The Longer Term, Morgan Stanley Warns
Sep. 14, 2021
The comments section under that article where Morgan Stanley is tamping down the recent move higher in Uranium are great, but evidence of just how bullish the sentiment is getting in this space. Still a few of them were quite informative or others quite funny.
Uranium Price At Multi-Year Highs; Bull Market Is Just Getting Started
Neils Christensen – Tuesday September 14, 2021
“Uranium pricing is fairly opaque; however, uranium futures on Nymex show the price trading at $44.15 a pound, a nine-year high. Weekly spot prices show uranium trading at $39 a pound, its highest level since March 2015.”
“The supply and demand outlook for uranium looked fantastic before Sprott came into the market, said Warren Irwin, found of Rosseau Asset Management. “The trust has come in and moved the inevitable rally forward a year or two.”
“Irwin is a long-term uranium bull has the market faces growing demand and a lack of supply due to a decade of dismal prices. He noted that it is difficult for new mine supply to come online with prices trading so low.”
“At the market’s peak in 2008, uranium spot prices were trading at $136 a pound. Some analysts are looking for uranium to push as high as $60 a pound by the end of the year.”
While the larger Bull market that started in late 2016 is still intact, and there is still much further to go, it isn’t really just “getting started.” The Uranium price and most of the key miners have been gradually grinding higher for years, in a whipsaw of fits and starts, with the first big pop in late 2016 to early 2017. That was the beginning as noted back then when it was happening from November of 2016 into that initial Q1 run into 2017.
Fast forward to this last year and half, since the March 2020 pandemic crash reset in all asset classes, and it has been different a bit different that the grind higher in prior years and has picked up momentum. As previously noted, so much trading volume has come into the sector since last year indicating the institutions and larger whales got positioned, and there were also the continued macro fundamental changes of more shuttered mines, producers and non-producers buying up the spot market, and now the Sprott fund buying up even more from the spot market. I agree with Warren here that this trend was a long time coming and already set up to go higher before this recent news of the recent buying from Sprott.
Again, while I’m still very bullish in the medium to longer term on the Uranium sector I’ve been lightening the load in my U mining stocks since last Friday, and sold more on Monday, more on Tuesday, and more today on Wednesday.
Over the last 4 trading sessions I’ve reduced down from 7 beefier positions, down to 10%-15% partial tracking positions across the board in my remaining 6 positions (one of those being a brand new one in Purepoint), and will be watching to pounce on any weakness we see over the next week or two. Short-term things are getting really frothy and overbought, as they do during mania runs higher.
I agree with Steve Penny here that while it is interesting that the momo Wallstreet Bets / Reddit / Robinhood / WeBull / Stash traders are in U stocks and pushing things higher, it would be far better for the medium term to NOT go too much more parabolic. Those kinds of parabolic moves usually end with a flood of new retail investors piling in at the very end of the move only to be bagholders and get disenfranchised and angry if pricing traces back down just as hard on the other side of the parabola. It would be far healthier, for the medium to longer term, for things to top out this week or early next week, and retrace a reasonable percentage of this move higher, base sideways, cool the technical chart indicators, and relaunch from a lower level for the next leg higher.
If we have another double-digit up day again tomorrow or Friday, then I may completely sell out of all my Uranium stocks (something I never thought I’d be considering just a year or so ago). Again, that would only be a short-term move, with the intention to reload on any corrective move. It’s tough, because if the momo traders are getting “irrationally exuberant” then it’s hard to know just how high they can push prices to ridiculous levels. If we see a few more of these “this thing is just getting started” articles come out soon, then that will be another cue to move to the sidelines and await gravity to set back in… like it always does…. Then rebuy when others finally start their profit-taking cycles.
Tuesday Price Quality Wrap-Up : https://tinyurl.com/2vc9pznu
PMs have turned (NEM lagged), but Dollar domination for now.
Continuing PGM weakness. Possible strong EV competition.
Per URNM’s shooting star, Uranium may be earth bound.
Thanks for that heads up on various sectors BDC.
Sure thing! Note that ‘Dynamic Power’ has been added back to the “Related” table.
CCJ pre-market now shows potential continuation to 28-31 …
Who knows? : https://www.youtube.com/watch?v=cQfSjAl4PTU
Same thing everyday with the precious metals. Too consistent to be anything but control of every mining stock.
yes david, most days the same with gold. Evidence is in price action and nothing else technical for now. You can nibble at the edges but otherwise best to watch.
I lost lots of money 10 years ago in uranium stocks . also am doing bad in silver mine stocks although i still have a lot of silver mine stocks . My food and soda pop stocks are making me money consistanly . Trump recent rallys have poor attendance and even his most ardant followers are saying he is becomeing a boor . FIZZ AND PEP are making me money as i traede in and out .
10 years ago was right after the Fukushima accident, so no wonder. I lost money in 2011 due to that as well, but that hasn’t stopped me from having dozens of good swing trades in the Uranium miners for the last few years since the U308 prices doubled bottomed near $17-$18 in late 2016 and again in late 2017.
The recent run in the Uranium miners coming out of the pandemic crash of 2020 through present has been quite epic, and provided a huge opportunity for anyone that has been following along with the sector with open eyes. One can buy a lot of food and soda pop, or reinvest in their related stocks with those kinds of returns.
Ex: You have done well with Uranium. Some day I will get the timing right. Seems when I dance, I do well at preparing to dance but sit down when the music starts.
Thanks David, but don’t sell yourself short. You have done an excellent job of finding the right sectors and identifying many of the individual companies in each sector that have had a solid bid, and you have had some nice runs in some of the better companies. That’s far more than many investors can say, and the dance in the commodities and resource stocks has been out of rhythm a lot over the last few years making the timing frustrating for most.
For me personally, having a good fundamental backdrop on the macro picture in each commodity, and understanding the fundamentals of the individual companies, counterbalanced with the micro technical set ups helps with the timing a great deal. Having said that I get wrong-footed just like everyone else trading these markets does. It’s a difficult dance…
For me, the inevitability of the Uranium sector to rise when all the mines started shuttering over the last 2 years, and the half dozen non-producers starting buying in the spot markets in unison, and then the Sprott fund starting to buy made it clear the Uranium price and related stocks were going to have to rise. I also noted and mentioned many times that the volumes coming in on the stocks to accompany the buying was far more than we’d seen in a long time, indicative of funds getting positioned and a sea change.
It was the same in some of the other macro setups and breakouts happening in other commodities over the last year like Lithium, Palladium, Copper, and Nickel. Really the most vexing sector has been the PMs as there have been fundamental and technical setups that seemed ripe, but then rotted on the vine, or were truncated breakouts.
Anyway, keep dancing and eventually we’ll find the right rhythm in this sector. Cheers!
Thanks for those good words of wisdom. FWIW the Adens think we are close to a PM move with gold kicking it off. I am ready…I hope.
That’s good to hear David, because the Aden sisters are sharp and have a good macro and quantitative approach to the markets.
Aussie U miners up sharply at lunch Wednesday
(SLVR) (SLVTF) Silver Tiger Metals Inc. – 2021 Precious Metals Summit Beaver Creek
September 9, 2021
Enjoyed the interview. Good Questions and Answers.