A buying opportunity in uranium stocks has emerged as volatility in the space increases, charts show

Published Mon, Apr 8 202412:32 PM EDTUpdated Mon, Apr 8 20241:23 PM EDT

Uranium stocks outperformed the broader equity market in 2023, with the Global X Uranium ETF (URA) gaining nearly 38% for the year. However, the segment has been more volatile in 2024, noting a corrective phase in February resulted in an 18% drawdown for URA. We think the recent volatility in uranium stocks presents an opportunity to take advantage of their cyclical uptrend. The choppy price action of late in URA has resulted in an intermediate-term trading range, which now gives the chart the look of a bullish cup-and-handle pattern. This applies to the Sprott Uranium Miners ETF (URNM) as well, which completed a basing phase (i.e., the "cup") last November that we featured on X . After a pullback in February, URA found its footing above support from the January low, near $26.60, enhanced by the 40-week moving average pictured in the chart. Last week, URA broke out above short-term resistance from its 10-week moving average, associated with an intermediate-term oversold upturn per the weekly stochastic oscillator. This is a positive technical catalyst that increases the likelihood that nearby long-term resistance of approximately $31.30 is surmountable. A breakout above $31.30 would complete URA's cup-and-handle pattern in a long-term bullish development, supporting its cyclical and secular uptrend. A breakout would also generate a long-term measured move target of about $43, which is more likely to be relevant for 2025. URA is the largest uranium ETF, with $3.2 billion in assets, and it has a reasonable expense ratio (0.69%). It is worth noting that URA's top holding, Cameco , makes up roughly 23% of the ETF. Cameco has an oversold upturn in its weekly stochastics within a bullish primary trend, which gives it a similar look to URA. DISCLOSURES: THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL'S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.