Wednesday, June 10, 2009

Some new Opportunities

So I'm not going to get into any politics today or any of my major issues with the fundamentals of the modern economy. There's still plenty of time to watch those little tidbits play themselves out.

But I will remind everyone that if you MUST hold assets priced in US dollars over the coming years please make sure they are things that hurt when you drop them on your foot! (Coal, Gold, Silver, Oil, etc.) And, hey, the producers of these things might not be such a bad idea either!

But a few potential opportunities have arisen on the TSX.

First off, Uranium One, a producer that has some large projects in Kazakhstan. Over the past 3 weeks the stock was hammered down from over $4.00 to under $2.00. This was based on the news that a company that Uranium One had done business with was being investigated by the governments, and that there were charges being laid against certain individuals for embezzlement of government funds, corruption, payoffs, etc.

You know the drill.

So anyway, everyone panicked like crazy since U-One did business with these guys. However one thing that should be noted is that two separate transaction were done by Uranium One, one selling off a large asset and the second buying that asset back a few years later. Both of these transactions were totally examined and approved by the same guys who are now laying the charges against the other company. The charges don't have anything to do with the Uranium One deal, but with other financial dealings of this other company.

Remember the whole "the psychology of trading" thing I wrote a long while back? Well, it turns out that sometimes that stuff presents some huge opportunities in an even huger way.

UUU (uranium one's symbol) Traded down to around $1.65 a few days back. Since then it's been on a pretty solid tear, gaining over 55% of its value since then. However, this puppy still has a way to go.

I picked up a small position at $1.85 of 500 shares. Today I added another 2,000 shares to my position at $2.60. I used a simple trend line to pick this second entry point (The first was strictly based on the fact that this was WAY WAY oversold!). The stock bounced off the trend line and held up really well. The moving averages are all still looking good. I have a sneaking hunch that this is a longer-term dumb-gap fill up to $3.25 where the panic really kicked in.

I have my sell order for 2000 shares in for $3.20 and my current stop-out is set at $2.40

Here's a chart with the trend to show you what I mean:

The next one I'm looking at is an OilSands producer called OPTI. It's currently in a really weak short-term downtrend after spiking up hugely on buyout rumors (apparantly there's a few brokers being investigated for spreading them falsely). Once I see a clear signal of trend reversal I am planning on buying this stock. I'll keep you posted on the technicals.

Happy trading all!


  1. Question.... From the finacial summary UUU shows loses. Why would I want to buy a company that stock went down 90%+ and it loses money from operations. Isn't this like buying WEBVAN (you remember what happen to them, right?). I do agree that owning solid assets (GOLD, Silver, etc...) is a smart thing to do for just in case scenario, but it seems to me that there are so many other options...

  2. This is not a long-term investment. This is buying and running with a trend until a clear reversal signal is shown. Then getting out of the trade with profits intact.

    I personally believe uranium will get very expensive in a few years so I'm planning on leaving about 50% of my profits in this stock and transferring it over to my long-term account. If you read through the company history the losses were mainly due to some bad mismanagement (the management is no longer there) - the underlying operation of Uranium One is solid and they are increasing production quarter over quarter.

  3. Hey,

    nice chart. Seems though that UUU is pushìng to the downside by trading sideways across the support line.


    Scary, Burnhard

  4. I see that the trend is dropping downwards.... could you confirm my thoughts... cheers Burnhard

  5. From what I'm seeing is that the trend actually has been broken over the last couple of days. The minor trend (reversal of the huge downward movement) was hugely bullish, while the mid-term trend was moderate bearish.

    these periods of consolidation are occurring right around the downward trend line off the three lower highs starting on May 12 and going to May 25.

    This was followed by the huge crash and the retraction. The last few days of consolidation have been butting against that mid-term trend line to try to get back to the long-term uptrend line.

    This is a swing trade and I am just moving my stops up with the stock. Very very tight consolidation on it but the trend is actually up long term still!

    I'll throw a post up with a couple of chart shots to show you what I mean. It is actually flashing a nice buy signal right now.