Sometimes the best waves to ride can be found in places that are overlooked. Ask any surfer where the best breaks are and they’ll gladly give their views…
Aside from the usual top spots like Pipeline, Waimea, and Jaws in Hawaii, Supertubes in South Africa, Teahupo’o in Tahiti, Mavericks and Trestles in California, and the Box and Superbank in Gold Coast Australia to name just a few, there are other overlooked spots less considered that have solid breaks. Did you know that Japan and South Korea also have some wonderful surf spots? Japan’s southernmost Kyushu Island can compete with the world’s best surfing destinations1. Also with three different coastline directions, the country of South Korea offers multiple surf conditions for avid riders year round. In case you are wondering why I am talking about Japan and South Korea its because in this Surf Report, we’ll analyze two Japanese companies and four South Korean firms that are involved in the nuclear energy industry making up the majority of the report. While we’re waiting for the “50 year storm” in silver, let’s see if we can scout out some overlooked spots to surf some Elliott waves in the next set of URAs holdings.
Energy Fuels, UUUU
Energy Fuels is the leading U.S. producer of uranium, vanadium, and an emerging player in the commercial rare earth business. UUUU had a solid impulsive 5 waves up from the 2020 low. Since topping in 2021 (where I personally sold my position entirely as it was hitting meaningful Fib resistance while sentiment was at its high), the price rallies we’ve seen have been overlapping and corrective. I view the Intermediate (2) as incomplete and still in need of a filled out wave C to complete the structure. Remember what we discussed in Surf Report 7.1 regarding pockets. We don’t want to get on this beast of a wave (3) too early. This is one I am personally watching closely to reinitiate a position once a bottom in (2) is confirmed.
Itochu Corp, 8001.T
Itochu Corporation is the first Japanese firm that we’ll cover. It is one of the largest Japanese sogo shosha (general trading and investment companies) distinguished by the strength of its textile business and successful business operations in China. Its included in the URA for its Metals & Minerals Company which engages in uranium mining and nuclear fuel trading. The Metals and Minerals Company is growing business for Itochu with net profits rising from ¥20B from 2022 to 2023 while other businesses lagged2. The Metals and Mining company operations only represent 30% of Itochu net profits so this is perhaps why the current wave structure looks a bit bearish over the mid term with a Primary wave 3 potentially putting in a meaningful top. 5 waves down from the recent high would help confirm this count.
Mitsubishi Heavy Industries, 7011.T
Mitsubishi Heavy Industries is another Japanese multinational engineering, electrical equipment and electronics corporation. MHI's products include aerospace and automotive components, air conditioners, elevators, forklift trucks, hydraulic equipment, printing machines, missiles, tanks, power systems, ships, aircraft, railway systems, and space launch vehicles. The nuclear business of MHI operates facilities in the cities of Kobe and Takasago in Hyogo Prefecture and in Yokohama, Kanagawa Prefecture. It also operates a nuclear fuel manufacturing plant in Tōkai, Ibaraki which processing 440 Metric tons of Uranium per year. MHI developed the Mitsubishi APWR (advanced pressurized water reactor) design and has been selected as the core company to develop a new generation of Fast Breeder Reactors (FBR) by the Japanese government. As far as MHI’s Elliott wave structure is concerned, 5 impulsive waves were completed from the March 2020 low. The downtrend line spanning decades has acted as meaningful resistance. With negative divergence building on multiple timeframes, Intermediate (1) has likely topped. One must be patient for Intermediate (2) to fill out but once it does, (3) could be an solid wave to ride. Keep an eye on this overlooked opportunity.
Doosan Enerbility, 034020.KS
Our first of four South Korean company that we’ll take a look at is Doosan Enerbility which is a heavy industrial company headquartered in Changwon, South Korea. Its business includes manufacturing and construction of nuclear power plants, thermal power stations, turbines and generators, desalination plants, castings, and forging. Once again, we have 5 waves up from a meaningful low in March 2020. Since topping in June of 2021, a very long Intermediate (2) appears to be filling out. More patience is likely needed. The potential strength of Intermediate (3) is shown in standard Fib extension levels (which have been estimated from a deep 61.8% retrace) with price potentially moving 9x over the next decade from its current level and even more depending on one’s entry on a deeper C of (2) retracement.
Hyundai Engineering & Construction, 000720.KS
Hyundai E&C is a major construction company in South Korea. The company successfully completed various projects such as combined cycle power plants (including nuclear), thermal power plants, as well as power transmission and substations as fundamental elements of energy networks, and industrial electricity projects. The companies shares had a VERY deep decline from the highs achieved in the late 1990s with a final low being made in 2004. Price rallied in a 5 wave structure which topped in 2007 and has been a Primary wave 2 ever since which may not be quite complete. The really off the 2020 low was not impulsive having overlapping 3 wave structures. Therefore I think we need to be careful of a deeper retrace to finish wave C of (C) of Primary 2 as shown. Only a 5 wave rally followed by a corrective pullback would invalidate this count.
Boss Energy Ltd, BOE.AX
Boss Energy is an ASX-listed uranium company focused on the re-start of the Honeymoon Uranium Project in South Australia. Based on the wave structure and Fib extensions, I’m viewing the November 2021 high as the Intermediate (3) high. This is because the underlying wave structure in minor wave 5 looks filled out from the minor wave 4 of (3) low completed in March 2020. Furthermore, the price action from the June 2022 low looks corrective which is indicative of a B wave. Remember B waves can exceed price of the previous high of the larger degree. This current rally could also be wave (v) of 5 of (3) which would hit resistance around the AUD 3.66 level but then we’d still need a larger pullback for Intermediate (4). In this case the Fib support levels I’ve shown would need to be adjusted a bit higher.
Daewoo Engineering & Construction, 047040.KS
Daewoo’s main nuclear construction projects in Korea that it has completed include the Wolseong Nuclear Power Plant, Nurimaru, Busan-Geoje Fixed Link and Jordan Research and Training Reactor. In a nuclear sector bull market, the firm may very well capture additional projects. DWEC is currently in a rather deep Intermediate (2) retrace after making 5 waves up from the 2020 lows. Price is currently finding support near the 61.8% level but a 5th wave down would make C of (2) look more complete.
BHP Group Ltd, BHP.AX
BHP is the world’s largest mining company by market capitalization extracting aluminum, coal, copper, manganese, iron ore, uranium, nickel, diamonds, silver and titaniferous minerals, as well as oil and natural gas around the world. I last charted BHP in Part 9.2 of the Upcoming 21st Century Stagflationary Depression Series. There I charted long term count in the NYSE issuance which has a lot more price history. For this report we’ll look a the ASX issue and zoom in a bit. The count remains valid with a larger degree uptrend underway. BHP may actually be entering the heart of an intermediate (3)! Price aggressively breaking above the AUD $50 would confirm.
Kepco Engineering & Construction, 052690.KS
Kepco E&C is a power plant design and engineering company in South Korea that engages in the design, engineering, and construction nuclear and fossil power plants. The company provides total integrated Engineering, procurement and construction (EPC) services. It has designed and built a total of 14 nuclear power plants including the development of APR-1400 next-generation nuclear power plant. As seen with other companies in this report and in 7.1, we see a completed 5 waves up in the minor degree from the 2020 lows with Intermediate (2) filling out. We should watch for support between the 0.618 and 50% retrace levels.
Summary and Observations
Once again, and as we saw in the Surf Report 7.1, many of the ETF holdings appear to be in corrective waves. Itochu may actually be starting a Primary degree correction which can last even longer. Only BHP seems to be in a larger degree uptrend that also still needs confirmation. This set of holdings comprises about 19% of URAs total weighted holdings as of this report. A summary of what we’ve found is below.
For completeness I’ve linked updated charts for previous analysis made in SR7.1 as well…
URA CCJ U-UN.TO NXE KAP.IL PDN.AX UEC DNN YCA.L
If interested in surfing some Elliott waves of the individual Korean stocks there is some good news for potential foreign investors. South Korea plans to scrap a number of regulations in the local stock market within this year to make investment easier for foreign investors3 so we’ll have to see how that develops. I’m interested surfing wave (3) in Doosan but could not find an over-the-counter (OTC) ticker available.
We’ll take a look at another batch of URA components in 7.3 in a few weeks. I also recently took a poll on Twitter (now known as X) to see if there was any interest in a series of Surf Reports covering US Homebuilders which typically lead the US housing market by 8-12 months. Housing is a major driver of US economic growth so it may be worth watching closely given what we saw in Part 6 of the Upcoming 21st Century Stagflationary Depression Series. There seemed to be solid interest in the X poll but I would also like to run a poll here for readers that are not on X or didn’t get a chance to vote in the first poll.
Thanks again for reading and support! Until 7.3…,
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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These reports take a lot of time / effort. If you enjoy them, coffee or KAG are greatly appreciated if you wish…
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Kinesis KAU/KAG: GAO2JIBCQFAEOPHJPGEIAKIANOJ5ZMBSGARLGLY5PRNJGKD64W3OZZNC
https://metropolisjapan.com/the-best-spots-to-surf-in-japan/
https://www.itochu.co.jp/en/ir/financial_statements/2023/__icsFiles/afieldfile/2023/05/15/23_ended_05_e.pdf (pg 3)
https://www.reuters.com/markets/asia/investing-south-korean-stocks-get-easier-foreigners-2023-regulator-2023-01-24/