Glowing setups in the Uranium Sector

I noticed today CCJ was showing a lot of strength and then one of the members of the 12631 chatroom (spinner) pointed out the strength that URA (global uranium etf) was showing as well. Going through a few charts after the close showed some nice setups, however before I proceed I want to get a few things out of the way and discuss some of the fundamentals (yes, voodo witchcraft).

First, I will not take any of these trades. There is too much headline risk in the market for my liking without trading things that could potentially sell off 20% in a day because some jackass lied on the safety inspection for the last 20 years to cut costs or because when they built the plant they opted to save some money by buying the retard GE exploding model verses the heavy water reactor, which coincidentally is the same reason I will not touch biotech or pharma stocks. But I digress, I have no interest in taking any more headline risk and so will simply watch these setups. Having said that, from a technical perspective I think there are some sound trades here.

Now onto the fundamentals. I am a believe in nuclear power for several reasons. First and foremost is that it is in fact safe if it is done properly. The real problem, of course, is the human element. Cost cutting leads to building unsafe reactors and not maintaining them properly, which then leads to environmental disasters of unprecedented proportions. Would the Japanese reactors have melted down with proper maintenance? I don’t know, but what I do know is it definitely wouldn’t have been as bad had the proper backup systems been installed and actually working (completely ignoring the idiotic handling of the situation by the government, again I digress).

Second, we simply have no viable alternative. As oil becomes scarcer and scarcer and is increasingly located in unstable or hostile countries, our energy dependence will cause us to look for other sources, chief among which will be nuclear as renewable are not currently viable – they are inefficient, provide unpredictable output, and beyond pumping water up a hill (or the dumb notion of charging a bunch of electric cars to use as batteries which was floated a year ago) we have no method to store the energy for when we need it. This leaves us with coal, nuclear, or some other thing we haven’t invented yet.

My point and case for this is Germany and the pledge to close all the nuclear facilities. This was, and is, political gamesmanship by a desperate ruling party to appear to be concerned about public welfare when in fact they were all in favor of extending the operating life of already out of date reactors months before. The infrastructure for Germany to produce the electricity it needs is simply not in place without their nuclear power plants, and I doubt highly they are keen on building a bunch of coal fired power plants. Therefore I conclude Germany has no alternative to nuclear power, however the choice they do face is if they want to produce that power in Germany or pay a premium and efficiency loss to have the power produced outside of Germany and then imported. This effectively is a hedge against some of the environmental and political risk associated with a nuclear disaster, effectively shifting it to some poorer country – which in my opinion simply increases risk. In any case, unless you can show me a way that we can produce power that doesn’t involve burning stuff, nuclear is the only option we really have left and entirely safe as long as it is run correctly.

Now onto the charts – starting with the weekly URA and IXC etf charts. Some of these trades have some obvious entry points, for others you need to judge based off your personal risk tolerance.

For UUU.TO I realize I didn’t annotate the chart – if I were trading this I would wait for a move higher here on volume and then add to the position on the likely retest of the breakout above the 50dma.

Hope you enjoy the charts.


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