Trump Uranium Plays: Bring it in for the Real Thing

Much like with steels, but in a more ferocious manner, the uranium plays which rallied, in part, on the prospect of a Trump presidency are unwinding today in front of Inauguration Day on Friday. 

We knew at some point there would be a sharp shakeout, given how inherently volatile all things commodity-related are. And when you factor in how many market players were thinking along the same lines of a major, multi-year bottom coinciding with the Trump factor as a bullish catalyst, it is only fair that the market would keep speculators honest with violent sell-offs along the way, even if the bullish thesis eventually proves true. 

At issue now is whether a relatively large cap, liquid uranium play like CCJ is a buy right here, right now.

We previously played CCJ inside Market Chess Subscription Services, but clearly did not want to overstay our welcome with the plethora of penny stocks like UEC URRE coming out with dilutive offerings in the after-market in recent weeks.

To be sure, these uranium firms are chomping at the bit to raise capital on the open market after years of taking it on the chin. And the true test, indeed, is whether underlying buying demand for these issues is now so powerful as to "trump" the newfound supply. 

Regarding CCJ, as ugly as today looks and feels, we simply have a high beta stock checking back to its 20-day moving average (orange line) and trend support (light blue) after a rather steep run-up. Imminent stabilization sets up a long before earnings on February 9th. Otherwise, if uranium stocks continue to unwind here, I suspect it means the market got way too ahead of itself in the Trump thesis, and that it became too obvious to too many speculators--Likely setting up a larger consolidation through time or through price during the first quarter of this year.