UUUU Stock: There Is Always a Bull Market Somewhere
In recent weeks, I have been pointing out my concerns that the market is likely in the process of forging a significant top, suggesting that a bear market might be brewing on the horizon. This is obviously not good news that I have been sharing.
So I am going to switch gears and focus on a silver lining in this market. For one, now that October is behind us, we have entered a seasonal strong period for stocks that will likely stretch into 2019. And of course, we must never ever forget that even if the major market indices are poised to correct, there is always a bull market somewhere.
For instance, uranium and uranium mining stocks have been slowly transitioning from a bear market into a bull market as the commodity is finally poised to make a comeback. In light of these events, I have decided to focus on Energy Fuels Inc (NYSEAMERICAN:UUUU) stock because I believe it is poised to benefit from such a move.
Its primary line of business is mining uranium, but it also mines vanadium. The performance of both these metals is why Energy Fuels stock has been appreciating as of late. The fundamental story does not tell us everything, because the price action on the UUUU stock chart is very compelling, suggesting that the gains are likely to continue.
For instance, Energy Fuels stock has just completed a technical price pattern that is suggesting that another move toward higher prices is now in development.
The pattern in question is captured on the following UUUU stock chart.
Chart courtesy of StockCharts.com
The pattern captured on the Energy Fuels stock chart is a sideways channel.
This price pattern contained a static high that resided at $3.65 and a static low that resided at $2.80. The pattern was created because Energy Fuels stock was oscillating in between these two prices points for three months.
On November 5, 2018, this all came to an end when UUUU stock broke above price resistance. This event, highlighted as a breakout on the chart above, completed the pattern and is now suggesting that higher prices are likely to follow.
As a standalone indicator, the completed price channel is a good start to suggesting that higher prices are on the horizon. That is why I have included the indications on the following stock chart that support this outcome.
Chart courtesy of StockCharts.com
This UUUU stock chart illustrates that the move off the lows in March has been subdivided into two distinct waves.
The wave highlighted in green is an impulse wave. An impulse wave captures the period in a bullish trend when a stock stages an advance toward higher prices.
The wave highlighted in purple is a consolidation wave. A consolidation wave captures the period in a bullish trend when a stock corrects.
These waves work together, creating the stair-step price action that bullish trends are so famous for.
The sideways channel also doubles as a consolidation wave. Its completion is suggesting that an advancing impulse wave is now in development.
This suggestion, that higher Energy Fuels stock prices are likely to follow, is being reinforced by the MACD indicator.
The moving average convergence/divergence (MACD) indicator is a simple yet effective indicator that is used to determine whether bullish or bearish momentum is influencing the price action in a stock.
This is very pertinent information because a stock cannot sustain a move toward higher or lower prices unless the applicable level of momentum is supporting the move. This is why impulse waves have been accompanied by bullish MACD signals and consolidation waves have been accompanied by bearish MACD signals.
The MACD indicator has just swung into bullish alignment, supporting the notion that higher UUUU stock prices, via an impulse wave, are now in development.
Energy Fuels stock has broken out of a trading range. This event has been accompanied by a number of technical indications all suggesting and supporting the notion that higher UUUU stock prices are likely to follow.
Check out the original article here.
Author: Patrick Brik, BAS, CFA, CMT