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Chart Advisor: Pondering Cameco Corp’s Surge

Chart Advisor: Pondering Cameco Corp’s Surge

Posted April 4, 2024

From SIA Charts

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Cameco Corp. (CCO.TO) 

SIA Charts’ relative strength rankings help investors manage risk by identifying stocks and sectors which are underperforming relative to their peers and/or their benchmarks and should potentially be avoided. Staying away from stocks that are not attracting capital can help investors to avoid areas at higher risk of absolute declines and relative underperformance and to reduce negative event risk.

The price of Uranium has increasingly been bouncing back from a February correction with a gain of 11.0% in the last month, including a rise of 6.7% in the last week. Boosted by a price resurgence, Uranium producing stocks have also been recovering from a winter correction and moving back up in relative strength rankings.

Yesterday, by jumping 24 spots to 13th position, Cameco Corp. (CCO.TO) has climbed up out of the red zone and returned to the Green Favored Zone of the SIA S&P/TSX 60 Index Report for the first time in about six weeks, confirming renewed interest in both the stock and the sector. During its previous 9-month run in the Green Favored Zone from May 2023 to February 2024, Cameco gained 46.5% while the S&P/TSX Composite rose 5.3% over the same period. Since the middle of March, it has become increasingly apparent that a winter correction in Cameco Corp. (CCO.TO) shares has run its course and accumulation has resumed. Last month, the shares found support at a higher low near $53.00, keeping their underlying uptrend intact. Shortly afterward, CCO.TO rallied up off of $53.00 on a volume spike, a sign of renewed interest. On Monday, the shares staged a breakaway gap to the upside over $40.00 and yesterday in a follow through rally, the shares closed above $63.00, calling off a potential bearish head and shoulders top pattern that had been forming.


Candlestick Chart

A close above initial resistance at the January highs near $68.00 would confirm the start of a new upleg. Should that occur, measured moves suggest potential resistance on trend near $71.00, $79.00 and $83.00. Initial support moves up to the $60.00 round number and breakout point from $56.00.

Last month, a correction in Cameco (CCO.TO) shares bottomed out in a bullish Bear Trap where they broke down by one row, flushing out stops and then turned back upward. In doing so, CCO.TO established a higher low, keeping its longer term uptrend intact.


Point and Figure Chart

Since then, the shares have been recovering lost ground and building on a bullish Double Top breakout. Initial upside resistance may appear at the January peak near $69.85, followed by $77.10 based on a horizontal count. Initial support appears near $59.60 based on a 3-box reversal.

With its bullish SMAX score (which is a near-term 1 to 90-day indicator comparing an asset against different equal-weight asset classes) increasing to 6 out of 10, CCO.TO is exhibiting short-term strength against the asset classes.


Originally posted 04th April, 2024

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