Members who have been here for a while know that there are only two stocks that I like for a long term secular hold, UNG and URRE, both benefit from the U.S.'s new power plant emission rules that would exclude even Clean Coal technologies. We actually found that out long after we had noticed the change in character in both of these stocks.
Yesterday some members who have had URRE for some time made some decent money as URRE closed up nearly 51% for the day with no leverage at all. Even though URRE is down from yesterday's spike, it is still up 17 or so percent from Monday. In the bigger picture I think this is great, but I'm more interested in the long term trend.
In any case, I'm not sure what sent URRE up, but here are the charts which do show some interesting concepts that we have talked about here for a long time.
A longer term 5 day chart shows a change in character in volume.
Taking a closer look, we have talked about how these long term price patterns, like this bullish descending wedge, that technical traders have been trading for nearly a century are manipulated and everything technical traders have grown to know about the market and price patterns, is used against them. The expectation of a descending wedge is when it reaches its apex, it should break out to the upside and retrace the base, or rally to the $3.50 area. Instead with both the bullish and bearish version of wedges, we often see an initial head fake in the correct direction (see yellow box) followed by a move that would stop out trades and THEN, a top or a base is formed and eventually price tends to move in the direction it was supposed to at the apex. We have seen probably well over a hundred of these in the last year and a half, almost all act the same.
Here's a break below a VERY obvious trading range, most would think this is a negative for the stock, but many times these breaks offer smart money a chance to accumulate in size (as you can see the volume spike) and at much better prices.
This is part of what also grabbed our attention for URRE, this is a daily chart! Look at the long term leading positive divergence, it appears URRE has been under serious accumulation for some time, I've seen charts like this before, specifically Home Builders during the 2000 Tech melt-down, their accumulation periods were about a year and a half and housing led the next bull market. They don't call them smart money for nothing.
As URRE broke below the obvious range, look at the 60 min chart's positive divergence in to lower prices, especially right before yesterday's launch.
The 30 min chart with a little more detail shows the same positive divergence below the range and it looks like there was some decent selling in to the highs yesterday, I still think URRE will most likely continue to build a large base and eventually move to stage 2 mark up where it becomes a high probability trending stock.
URRE is still up 17% since Monday, my long term Trend Channel stop is around $.50
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