I have studied all of the uranium mining stock price charts for a couple weeks now and URRE Uranium Resources looks like the cleanest chart to me and the most timely in terms of risk reward. I am adamantly bullish on URRE right now and long since yesterday. It is a beautiful consolidation pattern. URRE recently completed a 2B buy signal near the 2.64 range and I expect it to possibly blast higher into mid February in a new strong uptrend. The company bumped up its earnings conference call to mid February, I believe almost a month earlier than previously scheduled. They have slightly north of 100 million pounds of uranium reserves and one of the nicest looking charts I have seen in a long time. The latest update from UXC.com shows the uranium price bumped up yet again. The long term uranium monthly price chart looks very powerful.
I was open minded that URRE could pull back to the 2.0 range or slightly under but this does not seem to be a viable scenario as of this writing.
I also suspect that the more bullish the oil price gets the more it could feed into stronger uranium demand. Clearly we are talking about two energy sectors here. We already know that oil and oil stocks are very bullish on increasing demand for energy. But what happens when the oil runs out or Iran decides to drop a hint to a neighbor about its real intentions? We could see the oil price spike higher very sharply and in my opinion that should feed even more fuel into the uranium fire as it would possibly begin to wake people up that we need a clean alternative energy source that can free us from the middle east and other world supply risks having to do with oil.
Compared to the gold sector uranium is in a much better risk/reward state right now in my opinion. Gold looks tired and old and the mining stocks have already had huge runs. The commodities sector needs some new sled dogs and I think uranium fits the bill. Gold will probably eventually trend higher again along with the miners, but its all about timing and rotation.
The sweet spot for URRE would be if they can land a real development contract with Cameco Corp (CCJ) – the 100pound gorilla in the uranium space. My understanding now is that they only have a ‘memorandum or understanding’ which is probably just akin to an offer, but no real development or coordination contract.