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CCJ - buy or sell?

Jack Chan
www.traderscorporation.com
Aug 13, 2005

Intro

Uranium stocks have been the buzz among traders and hot money in the past few months, and rightly so as precious metals and other metals have been stuck in a trading range since early 2004. Again, I have no stories to tell, why this and why that about uranium, only from a technical perspective.

CCJ

Is the largest uranium producer and one of the best performing stocks. Liquidity is good, and tradable both sides of the border. In Toronto, its symbol is CCO.TO.

Analysis

- CCJ is in a bull market, period.

- However, looking at money flow (CMF), it is obvious that smart money was accumulating heavily during 2003 when CCJ was under $20. But money flow has been weakening these past few months despite higher prices, which is a sign of distribution, smart money are slowly cashing out.

- Volume is also confirming money flow, with volume having peaked early this year.

- Volume and money flow suggests that the easy money has been made as anyone wanted in this stock has bought, and we will need a new story, some unexpected change on fundamentals in order to bring in new buyers and drive this stock higher.

- I'll leave the stories and speculation to the fortune tellers, meanwhile, lets look at CCJ from our trading models.

My trading model identifies the two distinct phases of a bull market, the impulsive (IP) and corrective (CP).

During an IP, we buy and hold.

During a CP, we trade.

It is during an IP that maximum profits can be made by holding, and not trading in and out. Partial profits can be taken on a TLBSS but a core position shall remain until a CP.

Let's take a closer look...

According to the model, CP has ended with our IP1 in June, then an IP2, buyers should have been in around $41 and $44, and exit on a close below 50ema. We are currently testing 50ema, if successful, we'll have an IP3, which we buy on a reversal off the 50ema. If support fails, all positions should be closed and back to a CP where we trade the TLBBS/TLBSS. From a money management perspective, partial profits could have been taken on the recent TLBSS, and re-enter on IP3, if and when.

Summary

Anyone holding CCJ should stay long until a close below 50ema.

New money can buy MOC on a reversal, and exit on a close below 50ema, providing the risk is no more than 6%. (CCJ is a high beta stock and I allow twice the risk of an ETF)

It is your responsibility to track the stock as I cannot provide ongoing coverage and alerts for individual stocks.

8/10 update

We've been waiting for the IP3, and today we bought MOC on reversal at $48.06, exit on a close below 50ema which is currently at 45.49 and rising, risking just over 5% which is allowable for a high beta stock.

Good luck.

JC

Jack Chan
email: info@traderscorporation.com
website: www.traderscorporation.com