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Energy Fuels Breaking Out

|Includes:Energy Fuels Inc (UUUU)

During December last year, I published two articles on uranium, one on the commodity itself which discussed the supply/demand fundamentals and new catalysts which I believe will push that commodity higher in 2014 and for years to come. I followed up that with an article on mid-tier producer Energy Fuels, which I felt offered the best fundamental value in the space. My first purchases of UUUU were at $5.60 and I have been adding on the way up. The fundamental picture remains the same as when I published in December, but the technical picture has improved. In this Instablog post, I want to briefly review that technical picture and explain why I have added to my position in that stock.

The steep downtrend that halved the stock from its August levels was broken about the time I published my article. A higher high was achieved in January and a new uptrend was formed at that time. Like many stocks that are in a bull market, UUUU is going through the familiar pattern of rally, consolidate, rally some more, consolidate again, rally some more. I find that a profitable entry point is to enter as the consolidation phase terminates. The dotted horizontal line at $8.40 appears to be resistance that wants to be penetrated. A successful move above that level would indicate to me that the consolidation phase is over and that a new rally will ensue. Further technical support is provided by MACD making a bullish crossover. Finally, On-Balance Volume defined the downtrend and it now appears to have reversed direction and is defining the uptrend. These factors together suggest to me a continuation of the bullish pattern of trading in UUUU and consequently I have added to my position in here. I continue to look for a 2014 target in the high teens suggesting a potential double from here.

Disclosure: I am long UUUU.

Stocks: UUUU