Sentiment toward the beleaguered uranium sector may be turning positive.
Equity markets in the U.S. have declined in early trading today in what appears to be a reaction to earnings reports from some U.S. retailers and possibly to advances in commodity prices. Investors should note that U.S. equity indices continue to trade near or above key support/resistance levels such as 2,000 for the NASDAQ 100 (NDAQ100 CFD), 12,800 for the Dow Industrials (US30 CFD), and 1,400 for the S&P 500 (SPX500 CFD). Based on this, it appears at this point that the pullback may be a normal correction within the context of the uptrends that started in March.
Commodity prices, meanwhile, continue to climb, with particular strength emerging in energy and precious metals. Crude oil has gained 1.3% today, moving through $127/bbl and $128/bbl levels and climbing toward $129/bbl and its current measured objective of $130/bbl. Natural gas, meanwhile, has advanced through $11.00/mcf once again.
It also appears that precious metals may be starting to catch up to the advances of other commodity areas. Having broken out of a downtrend last week, gold has overcome resistance at $900/oz this week and could advance toward a retest of the $950/oz level. Silver appears to have stabilized near $17.00/oz and could follow toward a test of resistance near $18.50.
Despite the gains in commodity prices, Canadian markets appear to have encountered some resistance near 15,000 for the S&P/TSX Composite and 900 for the S&P/TSX 60 (Toronto60 CFD). As the Canadian markets have staged major rallies in recent weeks, it is possible that a period of consolidation near these levels may have commenced.
Canadian share update: uranium attracts renewed interest, BCE backs off
It appears that sentiment toward the beleaguered uranium sector may be turning positive once again. Through late 2007 and the early part of this year, the group had been under pressure, but this may now be easing. Today, Denison Mines (TSX: T.DML, Bullboard) has advanced 6.7% and broken through resistance at $8.00. Meanwhile Fronteer (TSX: T.FRG, Bullboard) has climbed 7.7%, UEX (TSX: T.UEX, Bullboard) has moved up 3.7%, and Uranium One (TSX: T.UUU, Bullboard) has gained 4.0%. The next key level to note for Denison appears near $9.50 where previous resistance and a measured objective coincide. For Uranium One, which appears to be forming an ascending triangle base, key resistance levels appear near $5.00 and $7.00.
BCE (TSX: T.BCE, Bullboard) has dropped 4.5% today on its return to trading in Canada this morning. Over the long weekend, a number of press reports appeared, suggesting that the banks that had agreed to fund the private equity takeover of the phone company may be looking to adjust the price of the deal or make some of the lending terms more stringent. With transaction risk apparently increasing once again, concerns over potential changes to the deal may continue to overhang BCE in the short term. Note that significant support levels appear near $36.00, and in the $34.00 to $34.50 range.
Upcoming free seminars
In the coming weeks, Colin Cieszynski will be making a number of free presentations for accredited investors across Canada.
Location Date Time Topic
Vancouver June 15 1:00 pm PT Sector Rotation and Pairs Trading
Strategies in Resource Markets
For more information on these and additional CMC Markets seminars, please go to CMC Markets Seminar Registration Page at http://www.cmcmarkets.ca/en/content/education/free_seminars.do
Upcoming educational webinars
In the coming months, Colin Cieszynski will be presenting a series of free webinars on trading for accredited investors from coast to coast.
Date Time Topic
June 10 7:30 pm ET Developing a Trading Strategy 2: Risk Management
Techniques (for CMC Markets clients only)
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This commentary is based upon technical analysis. Technical analysis is the study of price and volume and the interpretation of trading patterns associated with such studies in an attempt to project future price movements. Technical analysis does not consider any of the fundamentals of an underlying company, and as such is inherently uncertain and should not be the only factor considered by an investor in making an investment decision.
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