Update of Oils Versus Uraniums
from ChartWorks:: published by Institutional Advisors
We are in the time window where the uranium stocks can be anticipated to outpace the oils. Using Cameco (CCJ, CCO.TO) data from 1991 compared to the XOI index it is readily apparent that the ratio finds a low in the last two weeks of September through the first ten days of October. From there Cameco outpaces on the upside for the next twelve to sixteen weeks. In six of the past fourteen years the rally extended well into the first quarter of the following year.
There were only two instances where Cameco did not outperform the XOI coming out of a late September low (1996 & 1999). These were also the only years in which the ratio broke support after the 15th of October, so this becomes a reasonable stop loss point. A basket of junior uraniumís will likely outperform Cameco, just as a basket of junior oils may outperform the XOI. Corrections in the uraniumís provide buying opportunities. The use of the Commodity Channel Index (CCI) can be of value in such cases. Readings in the CCI(8) below -100 can serve as timely entry points. The following link from www.stockcharts.com may be helpful for monitoring the index: http://stockcharts.com/def/servlet/SC.web?c=CCO.TO,uu[w,a]daoanyay[pb200!c50][vc60][iLd8]&pref=G
Only a few in the sector have consistently good volume, so be careful about overweighting in the smaller issues. Names to watch can include: Cameco (CCO.TO), Denison (DEN.TO), Fronteer (FRG.TO), Forum (FDC.V), Mega (MGA.V), UEX (UEX.TO), Intíl Uranium Corp (IUC.TO), JNR (JNN.V) and Laramide (LAM.V).
The 50-week moving average (currently $55.60) continues to be a reasonable spot to expect support in crude oil. Once the CCI(20) reverses back above zero weíll have a good confirmation that the bottom is in place.
As anticipated, natural gas also continues to outpace crude oil. My two favorite natural gas royalty trusts, Shiningbank (SHN/UN.TO) and Paramount Energy (PMT/UN.TO) are trading at new five week highs.
Traders can look for an optimum exit once the daily RSI reading moves up through 70.
The opinions in this report are solely those of the author. The information herein was obtained from various sources; however we do not guarantee its accuracy or completeness. This research report is prepared for general circulation and is circulated for general information only. It does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. Investors should seek financial advice regarding the appropriateness of investing in any securities or investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. Investors should note that income from such securities, if any, may fluctuate and that each securityís price or value may rise or fall. Accordingly, investors may receive back less than originally invested. Past performance is not necessarily a guide to future performance. Neither the information nor any opinion expressed constitutes an offer to buy or sell any securities or options or futures contracts. Foreign currency rates of exchange may adversely affect the value, price or income of any security or related investment mentioned in this report. In addition, investors in securities such as ADRs, whose values are influenced by the currency of the underlying security, effectively assume currency risk.
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February 25th, 2020
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