From the Desk of Ian Culley @IanCulley
Metal and mining stocks are hanging tough.
Sure, miners aren’t flashing an overwhelming number of new highs, but they’re also not registering an alarming number of new lows.
That’s impressive, especially considering Copper’s epic false start.
While many precious and base metal stocks consolidate, let’s review the next group of mining names before they rip…
Check out the Junior Uranium Miners ETF $URNJ versus the Uranium Miners ETF $URNM:
Despite the significant overlap between these two ETFs, I view a breakout in the URNJ-to-URNM ratio as a clear risk-on signal (much like the relative strength displayed by junior gold miners).
The top four URNJ holdings – accounting for approximately 60% of the ETF – also belong to URNM. In comparison, those same four stocks combine for just 28% of URNM.
URNM also includes the $24B uranium bellwether Cameco Corp. $CCJ (a 17% weighting) and the Sprott Physical Uranium Trust (an 11% weighting).
Those differences are enough for me.
URNJ is stair-stepping higher, providing an excellent vehicle for expressing a bullish Uranium thesis:
Notice how the junior miners have respected our extension levels during the rally. If and when URNJ breaks above 31.50, I like it long toward 42.50.
But remember, we can’t take a long position until it posts a daily close above our risk level.
In today’s Commodity Trade of the Week, I’ll outline our risk levels for the top four components of the Junior Uranium Miners ETF…
COT Heatmap Highlights
- Commercials are approaching their largest net-long position for sugar in three years.
- Commercial short positioning for silver is hovering just above a new three-year record.
- Commercial hedgers’ short exposure to the 30-year T-bond is registering a new three-year extreme.
Click here to download the All Star Charts COT Heatmap.
Trades of the Week
Paladin Energy $PALAF – $3.25B Australian Uranium Miner
While not the cleanest breakout, Paladin Energy completed a multi-year rounding bottom formation in January:
Fast forward to today, price is consolidating just below our initial target.
I like buying PALAF on a decisive break above 11 with an initial target of 15.75 and a secondary objective of 23.50.
Denison Mines $DNN – $2B Canadian Uranium Miner
Denison Mines is printing fresh decade-highs:
DNN is one of my favorite Uranium plays as it continues to push higher while other miners churn sideways.
I like leaning into Denison’s relative strength as long as it trades above 2.25, targeting 3 and 4 with a longer-term objective of 6.
If you haven’t already, be sure to listen to JC’s conversation with long-time gold mining investor Tommy Humphreys. He has a great story about Denison Mines!
NexGen Energy $NXE – $4B Canadian Miner
NexGen is absorbing supply at a critical extension level of approximately 8:
I’ll buy NXE on strength above 9 if and when demand outstrips supply, with an initial target of 13 and a secondary objective of 20.
Uranium Energy Corp. $UEC – $3B U.S. Uranium Miner
UEC is consolidating just beneath all-time highs following the completion of a 14-year bullish reversal:
I don’t care for buying pullbacks, but it’s the best way to play this mining stock, as the March pivot lows define our risk.
You can buy weakness toward six bucks, targeting 12 and 19 over longer time frames. But you must let UEC go if it prints a fresh year-to-date low.
That’s it for today.
Thanks for reading.
As always, let us know what you think. We love hearing from you.
And be sure to download this week’s Commodity Report below!
Allstarcharts Team
