Today we saw huge volatility in the precious metals. Especially in Silver and the silver mining sector some frightening bearish engulfing candles formed. SIL – Silver Miner ETF, SLV – Silver ETF and SLW – Silver Wheaton are displaying blow-off top type volume. Immediate buying pressure is now gone and it is extremely tough to find entries with decent risk reward ratios. It looks like the Silver Short Squeeze might be coming to an end as the short term charts look ugly and it is now probably best to wait for the charts to set up again prior to initiating positions. I will soon add CNL.TO – Continental Gold to monitor pattern pressure building up. The stock is in the process of building a bullish flag.
What about Uranium? We witnessed some very nasty looking candles there as well. The main difference though is we are not that far into the cycle as with Silver. SLW – Silver Wheaton has been on a rocket ride for almost 2 years now. DNN – Denison Mines has been in a basing pattern for roughly 2 years and has only recently started to break out to the upside. To make a long story short, DNN is new stuff. A new idea. Literally the stuff dreams are made off. So, from a purely psychological perspective the Uranium trade offers excellent potential going forward as the pool of traders and investors who still have to discover the sector and to position accordingly is much larger.
The huge thrusting move in Uranium has attracted lots of attention. Look at the volume. Every trader worth his salt is doing some kind of above average volume scanning. There is simply no way Uranium stocks haven’t popped up in those scans.
I outlined an idealized entry for Uranium. Read my U.TO – Uranium Participation Chart Analysis if you haven’t done so yet. Although I have already built a sizable position I think odds are extremely high the big money is still to come. The charts have now created a situation where everybody is eager to buy pullbacks. I will continue to monitor the sector very closely for possible entries as I intend to buy more. I believe DNN – Denison Mines and UEX.TO – UEX Corporation are best of breed. So instead of buying into another name I might end up buying into URA – Uranium ETF in order to increase my exposure. Not sure yet.
So why did I go for such an aggressive title for this post? Simple. DNN put out a press release today. I highlighted the passages you should take note of.
The Wheeler River property, encompassing over 120 square kilometres, is favourably located along strike from the McArthur River deposit and is underlain by many of the same geological features that are present on that producing property.
This prospective quartzite ridge structure continues over 18 kilometres on the property, and to date the joint venture has only drilled on 1.3 kilometres of the 18 kilometres.
The Phoenix discovery has a number of geological similarities to the McArthur River mineralization, but is at a shallower depth.
Furthermore, we believe that these initial mineral resource estimates are just the beginning for the Phoenix trend. We’ve only just begun to uncover its potential. The planned winter drilling program will focus on two other zones (C and D), which could also offer significant resource potential. This project expands more and more every time we work it. I look forward to updated mineral resource estimates on the property in due course.
Thisprospective quartzite ridge structure continues over 18 kilometres on the property, and to date the jointventure has only drilled on 1.3 kilometres of the 18 kilometres.
Go read the entire press release. Reread it. Then reread it again. This is potentially the best Uranium deposit on earth in the making. Do your own due diligence. A quick recap of what I like about DNN:
- Grades – 17.99 % U3O8. These are monster grades.
- Location – It doesn’t get any better. Canada, Athabasca basin.
- Chart – Long base providing technical pattern pressure. The stock is now in what Stan Weinstein refers to as ‘Stage 2’.
- Sector – The whole sector is moving up in unison. DNN is not swimming upstream like Salmons do.
- News-flow – The stage is set for a steady news flow that has the potential to be a catalyst for further price moves to the upside.
That’s the reason why I have 3 Uranium sector overview charts on my public list:
- Uranium – Sector Overview Chart I.
- Uranium – Sector Overview Chart II.
- Uranium – Sector Overview Chart III.
One of my recent additions was a second India sector overview chart. I am starting to get more bullish for India as this is probably the one country that has outstanding potential over the next 2 decades. Something I am starting to monitor very closely in the background. Over time my public list most likely will be featuring more than 2 India sector overview charts.
For now I plan to be patient and to hold on to my Uranium stocks. We will see price consolidations as the recent advance has to be digested but ultimately I see prices moving up significantly higher. In accordance with Ed Seykota’s trend following wisdom I will try my best to ride this new trend as long as I can.
A nation’ s strength ultimately consists in what it can do on its own, and not in what it can borrow from others. – Indira Gandhi
My public list with all my charts can be viewed here:
http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID2791469
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