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Uranium Stocks in Full-Blown Correction

|Includes: Cameco Corporation (CCJ), URA

After reaching an intermediate peak mid-February, uranium stocks entered a period of weakness. The decline picked up speed in recent days, putting the sector in the throes of a full-blown correction.



My proxy for the sector is the Global X Uranium ETF (NYSEARCA:URA), shown above in the hourly timeframe. The correction began with a steep fall below a rising line of support drawn across earlier lows.

After several days of recovery, prices retested the prior low and failed to find buyers in sufficient quantity to forestall the next leg down.

A sudden downdraft in the broader market took URA all the way back to the January low, for a correction of 15%.

The Long Term PIcture


Cameco (NYSE:CCJ) is the bellwether stock in the uranium mining sector, shown here on the daily chart looking back a year.

The current upmove began with a long-term low in July 2010. Then a newfound interest in the uranium thesis took Cameco to a recent closing high of $43.59.

This appreciation faltered as uranium spot prices halted their rapid advance and yellowcake sold off slightly on increased supply.

On an intraday basis, Cameco has declined in line with the sector, down about 14%.

The stock is now in a zone where support is likely. However, should the current softness on the big board worsen, uranium stocks could face renewed selling pressure.