Uranium Offering Low Risk Technical Buying Opportunity In Promising New Bull Market

by Olivier on February 22, 2011

Hope you all had a great long weekend. Always a good thing to spend time away from the markets every now and then. On to the markets. Today we saw a sea of red. There was literally no place to hide. So much for what happened on the surface. Looking under the hood I cannot help but see a fantastic buying opportunity setting up for Uranium stocks. I outlined this Uranium buying set-up back back in August last year. The proxy I am using in order to analyze the Uranium market is U.TO – Uranium Participation. Today I redrew the bullish flag to include the recent highs into the pattern.

U.TO TSX Uranium Participation Buying Opportunity Bull Market Technical Analysis Price Target Chart Pattern

Up-to-date U.TO – Uranium Participation chart on my public list.

As outlined in my chart annotations this is THE technical buying opportunity you do not want to miss. As much as it may hurt, you absolutely want to build or add to existing positions the first time price pulls back towards to weekly moving average 30. This is one of the lowest risk entries early on in a bull market. There are no guarantees in life but this is as close as it gets. I don’t know if things will work out in the end, but this is an opportunity I am not willing to let go by without taking action. Even if you don’t get the perfect entry, if you manage to get in during this pullback you will dramatically increase the odds to comfortably ride the whole bull market in Uranium.

DNN DML.TO Denison Mines Hitting Multiple Support Uranium Bull Market Technical Analysis Price Chart Pattern

Up-to-date DNN DML.TO – Denison Mines chart on my public list.

Speaking about buying opportunities in Uranium stocks, DNN  DML.TO – Denison Mines today looked very much like one of the most hated stocks in the Uranium sector. DNN was down roughly 10% for the day. It is down more than 15% from its recent high. The stock obviously could go lower but as a general rule sharp and brutal counter-trend moves are most often the greatest buying opportunities you could ask for. That being said DNN is hitting multiple support here. The recent consolidation pattern was contained by the 3.60 price level. This former resistance level should now act as support. In addition to horizontal price levels offering support, a trendline and the daily moving average 50 are also offering support. I am putting my money where my mouth is. Today I added to both my DNN and UEX.TO positions.

The next few days will separate the wheat from the chaff. When it comes to the technicals of the overall market I am watching the following parallel price channel for the S&P 500. Until the lower trend line of the channel holds, sector rotation can continue and stocks with good technical set-ups can continue to break out to the upside. Judging from today’s action though, I would expect trading to get much more difficult and I would expect increased volatility for the next week or two.

Courage is resistance to fear, mastery of fear, not absence of fear. – Mark Twain

My public list with all my charts can be viewed here:

Buenas noches!

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