Surf Report 7.1: URA will be "Explosive"

Uranium Miners and Related Companies in URA, Part 1

By popular vote we will now turn our attention to the Uranium sector. We saw in Surf Reports 6.1 and 6.2 that the Oil and Gas Sector certainly has some potential energy left in it with XLE and many individual stocks implying a final intermediate wave (5) in the making within a Primary Wave 1. Will we see similar wave structures within the Uranium sector?

The Pocket…

In surfing the pocket is the money spot. Also known as the curl, it's the optimal energy zone - the place where a surfer should stay to achieve maximum speed. In Elliott Wave, the heart of a wave 3 is the pocket. Therefore its very important to make sure wave 2 is fully filled out and completed before hopping up on our boards to Elliott Wave surf the longest and strongest portion of the wave structure where some of the biggest profits can be made. Positioning too early on a wave 2 can be dangerous as wave 2s can retrace 100% of the entire price movement achieved in wave 1 of the same degree. Its like getting ahead of the wave a bit too early, not achieving the proper speed, then wiping out as the wave crashes over you. Keep this in mind as we look at the Uranium sector. Uranium can serve as a major fuel source for nuclear energy to power humanity forward when oil and gas prices soar. Let’s see if we can harness some of that “energy” for our investment portfolios shall we?

During this multi-part series we will analyze components of the the Global X Uranium ETF (URA). This exchange traded fund has 47 total holdings which include a broad range of companies involved in uranium mining and the production of nuclear components. With so many holdings this will take at least five or so Surf Reports to capture them all. I anticipate it may take a couple months or so to get through them all.

Let’s “nuke it” 😂.¹

Global X Uranium ETF, URA

Many on Uranium Twitter have been very bullish these past few months but I haven’t been so sure because the price action hasn’t been entirely impulsive. The rally waves continue to overlap with one another. In URA we have yet to see a clean 5 wave impulsive structure so the probabilities are that wave (3) is starting off as a weaker leading diagonal or there is one more lower low in store. I’m currently leaning towards on more lower low to complete the lengthy intermediate correction. The corrective wave (2) structure fits best as a double three combo with a messy (b) wave taking its time inside of Y of (2) as shown but I’m also open to an ABC structure shown in yellow.

Cameco Corp, CCJ

Cameco Corporation is the world's largest publicly traded uranium company and the second largest uranium producer, accounting for 18% of world production. It is the largest holding in the URA ETF and represents nearly 24% of the funds total weighting. CCJ had a 5 wave impulsive structure off the 2020 low that extended just short of the standard 1.618 level. Given that this is an Intermediate wave (2) correction we would expect a minor degree ABC (or other corrective pattern) to take shape. The move down from the September 2022 high which I’ve circled in green was not a 5 wave structure that would expect for a C wave. Therefore we must consider that all the entire rally we’ve witnessed since the beginning of the year is a large B wave with a deeper C of (2) to follow that would likely find support between the 50% and 61.8% retrace. The Intermediate wave (3) extension is estimated for the 61.8% retracement.

Sprott Physical Uranium Trust, U-UN.TO

The Sprott Physical Uranium Trust is a closed end exchange traded fund which invests and holds substantially all of its assets in uranium in the form of U3O8. It is the worlds largest Uranium Fund and accounts for nearly 10% of the URA ETFs weighted holdings. Here we see both a clear A and B wave within Intermediate (2) which also looks incomplete. We should now expect a 5 wave down move towards the 38.2% retrace if this is a running flat or perhaps deeper to another touch of the arc support between the 50% and 61.8% retracement levels. Standard Fib extensions for Intermediate (3) are shown from a deep retrace to the 61.8%.

Nexgen Energy, NXE

Nexgen Energy is a Canadian company focused on developing its 100% company owned resource called the Rook I Project. The Elliott Wave counts are a little different from what we’ve seen so far in this report. Intermediate waves (1) and (2) have already been completed and we should likely expect on more wave higher to complete Intermediate (3) after Minor degree 4 has been completed. I’m currently viewing Minor 4 as an A-E consolidation triangle.

Kazatomprom, KAP.IL

National Atomic Company Kazatomprom Joint Stock Company (Kazatomprom) is the world’s largest producer and seller of natural uranium, providing over 40% of global primary uranium supply in 2019 from its operations in Kazakhstan. Here we see a clean 5 waves up from the 2020 low to complete Intermediate (1) with again more consolidation necessary to finish C of (2).

Paladin Energy, PDN.AX

Paladin Energy Ltd is a Western Australian based uranium production company. The company also holds a 75% interest in the Langer Heinrich Mine (LHM) in Namibia. PDN is in a similar position as NXE with Intermediate (1) still not completed. I’ll be a watching this one closely over the next several years after (1) completes since the Intermediate wave (3) and (5) extensions could be potentially explosive.

Uranium Energy Corp, UEC

UEC is a pure-play uranium company located in the United States and is advancing the next generation of low-cost, environmentally friendly In-Situ Recovery (ISR) mining uranium projects. The Company has two production ready ISR hub and spoke platforms in South Texas and Wyoming. I can count a complete 5 wave structure off the 2020 low for what could be considered an Intermediate (1) but could also be an (A) wave in a larger degree diagonal. Intermediate (2) does not look complete just yet based on the structure in wave C which needs a full 5 down. UEC Intermediate wave (3) could be a nice wave to ride for patient Elliott Wave surfers.

Denison Mines, DNN

Denison Mines is a Canadian uranium exploration, development, and production company best known for its mining projects in Blind River and Elliot Lake. I’m open to a the alt count where a higher B awaits but my primary count is that a Wave C of (2) is in progress. Standard Fib targets for Wave (3) from the 61.8% retrace level are shown and could also prove to be an epic Elliott Wave surfing opportunity. Let’s watch and let (2) finish up first.

Yellow Cake PLC, YCA.L

Yellow Cake plc is a London-quoted company on AIM. Yellow Cake holds physical uranium oxide. The company has a strategic long-term contract with NAC Kazatomprom JSC. In this regard I suspect we may see a similar wave structure as the Sprott Physical Uranium Trust. I do see the potential for a higher B, but lean towards price being in the heart of C of another Intermediate (2) wave that seems to be drowning the Uranium bulls that view wave (2) as being complete.

Summary and Observations

Just as we saw for many components of the XLE in Surf Reports 6.1 and 6.2, there are also some lulls in the surf here within the Uranium Sector. However the difference is that many of the components in URA (and URA itself) are bottoming in an Intermediate (2) instead of a (4) as was seen in the Oil and Gas sector. Will Uranium shares outperform Oil and Gas when the energy sector as a whole finds an intermediate bottom? I think this is possible based on the waves that we’re seeing here so far. Surfing solid Intermediate wave 3 pockets can be highly profitable. The standouts so far appear to be UEC and DNN based on the potential Intermediate (3) Fib extensions. PDN and NXE are still finishing up Intermediate wave (1) structures. I’ve listed standard Fib targets that would be expected for a wave 5 between the 1.618 and 1.786 but prices for these stocks could always extend higher.

All components in the report appear to display some great longer term opportunities based on larger degree wave structures but we must keep in mind our timeframes, risk tolerance, and of course opportunity cost. Having learned how long these intermediate bottoms can take based upon what we saw in precious metals, we must remain patient for these Intermediate wave (2) lows to finish and not get ahead of wave (3) too early. No wipeouts please!

That does it for this first surf report covering the Uranium Sector. We’ll take a look at another batch of URA components in 7.2. I hope you enjoyed reading this report

Until then,

Cheers and #EndTheFed

Hypersonic78

Disclaimer: None of this is financial advice. Please do your own diligence. The views expressed here and other Surf Reports are my own. Only risk what you can afford to lose in these crazy markets. Know your timeframes, parameters, and risk tolerance.

Position Disclosure: I am currently not short or long any companies/assets covered in this report but am simply watching them for a possible low risk long entry.

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1. https://www.urbandictionary.com/define.php?term=nuke%20it