Uranium Stocks – Still in downtrends, but time to start slowing accumulating positions

by JDH on May 19, 2008

It’s Victoria Day in Canada, so the Canadian markets are closed, so I thought I would take the break to take a quick look at some uranium plays. Is it time to start buying yet? According to davidslane over on the Buy High Sell Higher Forum, Australian Uranium Stocks did well over night. He says that PDN.TO – Paladin Resources Limited did well. Here’s the chart from the close in Toronto on Friday:

paladin resources limited

This chart, going back three years, looks like a downtrend to me. However, it is possible that the $5.25 level does represent a break of the down trend, which could happen any time. The stock is above the 50 day moving average, but not yet above the 200 day moving average at $5.46.

The $4 level looks like strong support, but the RSI is getting high, so I think I’ll play this with a stink bid at $4.25 on the assumption that we won’t completely retest the lows. It’s gone from $4 to over $5 in less than a month, and runs like that normally require a pull back.

In other uranium stocks, DML.TO – Denison Mines Corp. is still in a long term downtrend as well.

denison mines corp

Denison is above the 50 day moving average but not yet above the 200 day moving average, and it spiked last week, so I’m putting in stink bids at $7 for a possible pull back.

The chart of UUU.TO – Uranium One Inc. doesn’t look pretty either:

uranium one inc

Uranium One has inched over the 50 day moving average, but the stock and the RSI have turned downward, so a stink bid at $4 is probably the way to play this, although simply doing nothing also makes sense.

Finally, JNN.V – JNR Resources Inc. also has a terrible looking chart:

jnr resources inc

I assume there is solid support at 75 cents, so if you have an itchy trigger finger the stink bid goes at 80 cents.

The price of uranium is still going down (see chart at right), so as much as I love the uranium stocks, I see no reason to be aggressively buying now.

“Sell in May and go away” is usually good advice, so holding some cash and buying at stink bid levels makes sense. I’m not chasing anything. I prefer to wait to see if we are at the bottom. Yes, I may miss some of the upside, but so what; I also limit my risk on the down side.

Time will tell where uranium stocks go from here.

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