Cameco (CCO.TO, CCJ) has been in a downtrend for so long, only the most stubborn investors are still in the stock. This stock is set up for a very interesting turn of events.
Looking at the USA ticker (CCJ), the results are similar.
A little discussion on the merits of the technical condition is warranted because the stock looks to be on a crash course in a mine shaft. The reason there is some optimism for a trade here is the volume. The last two weeks have seen more than double the average volume on both the Canadian and US side. The MACD has finally turned positive and any investors that have owned the stock earlier than August are in a house of pain. In the last twelve years, only the investors buying in the last couple of months are still profitable. It has been a 'value' trade for a while. There are very few volume bars in Canada on the chart that are this big. In the US since 2011, there have only been two other occasions. So all of a sudden, someone is stepping in to own the stock.
I have been doing some work on finding SCTR's that are beaten down for months and then start to perform. Cameco looks like a setup to this trade style. The trades still have to be managed but it can be a clue that investor attitudes towards the stock are changing. Probably the most interesting part of the chart is the push below the 2009 lows and now the volume is coming in. Of course the macro picture suggests that all the Nuclear power plants in Asia should make these uranium stocks surge for long term supply agreements. Cameco's Cigar Lake facility is one of the premiere mine sites in the world owned by a company that has a solid history for their nuclear sales relationships.
If you like bottom fishing, this is a serious target. Bottom fishing requires discipline, so understanding where the trade will go wrong is as important as putting money to work to the upside potential.
I will be hosting the Canadian Technician Webinar 2106-11-15 at 5 ET. If you would like to join me, we will focus on some of the Industries that participated in the Trump Jump, as well as highlighting which industry groups look set to be out of favour for a little while here. You may also be interested in checking out The Commodities Countdown Webinar 2016-11-10 recording. I discuss the implications of a rising US Dollar with respect to the commodity markets. I think it will be one of the bigger themes for 2017.
Good trading,
Greg Schnell, CMT, MFTA.
