Camecofrom ChartWorks:: published by Institutional Advisors
December 15, 2007
Technical observations of RossClark@shaw.ca
Cameco Uranium’s outpaced the oils on the upside from mid August through the end of October. During the next four weeks both markets gave up ground, with the uranium’s underperforming. The ratio of Cameco vs the oil stock index (XOI) is now at new lows for the year. This is the first time since 1999 that the uranium’s have underperformed in the fourth calendar quarter.
Looking at the years with poor fourth calendars quarters (1991, ‘96, ’97, ’98 & ’99) we find that Cameco has a number of consistent characteristics. Tax selling pressure in the first two weeks of December takes the stock below major support. If it is coupled with an RSI (14) reading below 30 (four of the five examples) a tradable low becomes available. The first day with a higher high following the oversold RSI reading becomes the catalyst for the rally. Risk can then be controlled below the pivot low. Following the reversal a recovery rally of 15% or more, peaking around the 34-day Bollinger Band can be expected over a period of four to six weeks.
December 15, 2007
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