There are assets out there that have a lower or no correlation with the rest of the U.S. Stock Market. These investments are really helpful, but even more so when we're looking for stocks to buy in an environment where we think most stocks keep falling in price. One of these less correlated areas is the Uranium space.
Investors in Uranium stocks over the past 7 years have been some of the worst stock market investors in the world during that period. Think about this, Uranium investors have performed even worse since 2011 than gold and silver investors! That is saying a lot. We've already been buying precious metals stocks the past couple of months so it seems like rotation into the worst of the worst areas is happening in unison.
First of all, here is the Uranium Futures chart breaking out from the downtrend it has been in since the Fukushima nuclear disaster in 2011 that marked the top in the space:
Click On Charts To Zoom In
Here is another way to look at it:
Either way, these are not bearish setups. I think if Uranium is above 27, we need to be long the space.
Is this breakout in Uranium Futures a heads up that we should expect the same from the stocks themselves?
Let's take a closer look at that Uranium Fund. It's been decimated since March of 2011. But notice how on this last sell-off, it managed to make a new all-time low, and then quickly recovered. What I find even more telling is that weekly momentum has been in a bullish range for years and prices have not been able to break to new lows. That sets the line in the sand at $12. If we're above that, a long position is perfectly justified and the risk is exponentially skewed to the upside:
Getting back to the 2017 highs represents almost 50% of upside from here. I like that risk vs reward.
Here are the risk levels and targets for Uranium stocks:
Let me know what you think
JC
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