Do you remember the huge rally we saw in the price of Uranium from January 2001 until June 2007 ? It was an absolutely HUGE rally, one of the most amazing rallies I have ever seen in my life, or at least since I started following markets in 1994.  Maybe some of you have seen better rallies than this one, but for me it was one for the record books.

Uranium Shot up 1842% from 2001 to 2007 !

How many other commodities do you know of that had such a huge run since 2001 ? I don’t know of any others. Crude oil has a pretty good run and soybeans did too.  But I don’t think anything else compares to how bullish a run that was in the Uranium price.  So it is pretty clear that the entire run in the uranium price was from 2001 to 2007 was a clear sign of strength.  The market was trying to tell us something and I think quite a few got the point.  But now what?

Since the peak at about 140 per pound, the price of uranium crashed down to a low near the 42 area (That crash in price from 138 to 42 went a little bit past the 61% fibonacci retracement level of the entire rally that began in 2001), but since then it has been sort of basing around and I believe it has found support and will soon get legs for at least a reactionary 61% retracement of the decline that began at the 138 level.  If it does that then it would put the uranium price back near the 100 level.  Whether or not uranium is able to go higher than that is not a concern to me for right now.  Lets focus in on the near term and see if a strong reactionary upside bounce to 100 can occur.

On the chart to the left you can see the uranium had a long trading range as defined by the red dotted lines from the period of 1987 to 2004.  This was a very long period of sideways consolidation and in fact is one of my favorite type of patterns to spot.  Why? Because a sideways consolidation that occurs for such a long period of time is indicative of a very large eventual upside move once demand is able to overtake supply.

I was not smart enough to call the breakout in the uranium price from this trading range in 2004, but Jim Dines was.  What a great call. It just goes to show that some of the best trades in the world are the ones that no one cares about and that are quietly doing their thing in their trading ranges.  Only the keen traders that are watching these basing ranges are able to capitalize on them when they notice that a change is at hand (ie. price breaks out of a long trading range).  By the way the chart above shows quarterly closing prices, this is not the uranium futures contract, they are the monthly prices from the Ux Consulting Company, LLC and Cameco Corp.

This RSI chart to the left is the 14 day RSI chart of the MONTLY uranium price.  At the peak the RSI value reached 99.97, basically almost reaching 100 which is almost unbelievable !

Also from 2004 to April 2007 the monthly RSI held consistently ABOVE the 90 level.  Also unbelievable !

I have never ever or at least very very rarely have I ever seen any stock or index behave so bullishly for such a long period of time.  I mean heck normally I get concerned when RSI gets above the 80 level and start to get really nervous about holding on too long to whatever I happen to be in. But here we can clearly see that uranium broke all records and technical milestones and shot up like a rocket with almost zero selling pressure !

Finally this chart to the left is the continuous uranium futures contract with the weekly prices. It looks clear to me that we have almost completed a double bottom on this chart and the MACD signal line is confirming a buy signal for me now.

The uranium futures contract looks like it is extremely thinly traded with very low volumes and basically almost no liquidity to be found.  But I bet there are a few smart traders that are accumulating this contract right now regardless of the bad liquidity issues.

So what if the Uranium Price is going up? Now what?

A handful of uranium stocks have had a good run from their lows of 2008 and early 2009. Many of them appear to be consolidating now in a sideways range but still the trend appears to be in the upward direction.  I am not quite sure how they will behave in a deeper stock market correction but for now they look constructive to me.

Cameco (CCJ) could come back down to support at 20 and be a good buy there.  But I also like Strathmore Minerals which trades on the Canadian exchange (symbol STM). Strathmore looks like a good 6 month trend play as long as it holds above .50 cents going forward.  It cannot break under .50 cents as that is an important area of support.  But it has a nice pattern and combined with a nice bounce in the uranium price I am giving it good odds for a nice move up.

It has a nice base from November to mid April and then a very nice breakout and sign of strength with outstanding volume.  So now it is perched above support at near the .50 level.

But again, it needs to hold above .50 and also more preferably needs to hold its breakout range from that red down slanting resistance line I have drawn.  Gosh of all the contrarian plays out there uranium sure does seem to fit the bill. I mean who in the heck cares about uranium? Not too many people.  But that spells opportunity.  It has an absolutely unbelievable run before, so now I think act II is coming up. But we shall see.

I am giving STM a rating of 2 from 1 to 10 with 1 being the highest level of confidence.

I will try to revisit this sector down the road and see how things are cooking and whether I was correct or not.

Happy 4th of July weekend to all.

God Speed to you.

I downloaded the demo to my PC which took about a minute or so and then went through the setup routine all of which was pretty much painless.  The install was clean and after I started the program the log in just required my email and a password.  When I first went to the site to download the demo I did not have to fill out any personal info or my address or email or anything like that, so that is a plus.

Here is the main screen that comes up after you start Track n Trade:

To see the chart of any stock just type in the symbol in the top right hand corner.  The data loads the prices and depending on your internet connection you will see the chart probably within 5 seconds at the most.

First Impressions

My own first impression of the look of the chart, the price bars and the overall clearness factor is pretty good, in fact it is one of the better charting interfaces I have seen. It is razor sharp and the attention to detail is clearly evident once you start working with the interface a bit.  The current price that the stock is trading at is highlighted in with a red box on the Y axis and a long horizontal red dotted line pans all the way across the screen to help identify if the current trading price has hit any support or resistance zones.

You see all those red arrows I drew on the chart above? Well I did it because I wanted to point out a very important thing to master with Track n Trade and that is the scaling of the price chart.  On the Y axis there are two vertical zones. You can clearly see them spilt with a vertical dotted line.  Each zone when you click and drag in that area will either pan the entire stock chart up and down, OR it will compress or expand the chart.  The same holds true for the X axis.  This is important because at first it may seem difficult to master the scaling of the chart, but it is actually quite easy if you follow what I just said.

Speaking of following what I just said, Track n Trade has all sorts of quick and easy video tutorials on all aspects of the software that will get you up to speed FAST.  So I would not worry about a big learning curve with this software.  You should be up to speed pretty quickly.

The Indicators on Track n Trade

I really like the clarity of the indicators, the time frames tabs and just the general very professional appearance of the interface. I happen to be a huge fan of volume and I can tell you that the volume bars are very clear on the chart and large enough easy viewing.  Too often on many free online charting sites volume is just an afterthought, not with Track n Trade.

Adding or deleting new indicators or options right on the chart is very easy and can be done intuitively with a click of the RIGHT MOUSE BUTTON.  I like that. It saves time and makes the platform more intuitive.  I was easily able to add or delete new indicators with a right mouse click.  Also I should point out that one can very easily increase the size of the indicator display area to cover the full size of the charting interface.  This is extremely important because it enables you to see with razor sharp clarity exactly what your indicators are telling you and whether or not they have crossed or broken certain key technical levels.

Track n Trade has all the standard important indictors you expect to find and plenty of extra ones too.  They have a pretty neat elliott wave indicator that you can map right on the chart and they also have the standard Fibonacci indicators as well as Gann Fans.  There are a couple other nice indicators that let you quickly see how many days have passed between two points or percent between to points as well.

On the very top left of the charting interface there are 7 tabs that when clicked, will show all sorts of information in the left large panel.  The first one shows your stocks watch list. The second one is for buy sell orders to be placed along with detail info about the stock that is currently displayed.  The next tab has a bunch of market reports and stats reports on active stocks by exchange and so on. Then there is an RSS tab for displaying RSS feeds within your trading window. The next button is for indicator customization and then the last button has a little note pad for taking notes.  I love that little notepad feature, very useful.

One of the Best Features of Track n Trade is…

Track n Trade has a superb feature that allows you to essentially paper trade in real time.  It is a bit difficult for me to explain exactly how this works unless you try it yourself, but I will try anyway.

In the image above you see those VCR style buttons on the right hand side?  They allow you to go back in time on any stock or index and then one day at a time view the next price bar and place buy and sell orders depending on what the signals are telling you.  This is really a great feature especially for beginning traders, but also for seasoned traders because it allows you to test your trading skill based on any set of indicators you choose and then to see in real time what your account value is based on your buy and sell decisions.

The problem with paper trading in the markets without this feature is that you have to WAIT days and weeks and months before you will see the results of what your decisions were.  With Track n Trade, you can go back in time as far as you want on ANY stock or index and then with VCR like buttons move the chart’s price bars forward ONE AT A TIME to see if any new action is warranted.  Great feature!

You can also place your buy and sell orders right on the chart as time moves forward so it seems like you are placing real trades right on the chart. Then, step forward one day at a time and see if you were correct in your analysis, WITHOUT WAITING!

Truly an outstanding feature.  I am surprised that other charting programs have not come up with such a feature yet.

The Bottom Line is

Track n Trade is a great piece of trading software with plenty of useful features for the beginning to advanced trader.  The clarity of the charts, the indicators, and the bonus features such as the historical trade simulator make this trading software outstanding.

I have seen a lot of trading software packages out there, in addition to all of the online charting systems and I would say Track n Trade finds itself in the top tier of trading software programs.  I give it a 9 out of 10 stars with 10 being the best.

You can download Track n Trade right here and try it out yourself.

It seems like that is the most difficult thing to do in the field of trading and technical analysis, to change one’s opinion quickly if necessary and take a complete opposite stance on the market.  Maybe it is not the most difficult aspect of trading but I would say honestly that it probably ranks near the top as far as skills to master when trying to time the market.

So you see yesterday I had the idea that the price was still constructive on the emini futures and that we appeared to be trending up in a somewhat ascending triangle pattern. I made the point that price had not given up that much ground since early May and could be indicative of internal market strength.

Well my news analysis now suggests that we probably made a pretty important top as of yesterday.  By important top I mean that it may be a while before prices start trending up strongly again and resume the uptrend we have been in since March.

There are a few reasons why I am thinking this way.

The first reason is that we may have a head and shoulders topping formation here.  I drew in the left shoulder, head and then part of the right shoulder.  A lot of times the right shoulder can be equivalent in terms of time to the left shoulder, but not always.

The second reason why this could be a top is the fibonacci factor.  If you calculate the fibonacci retracement levels from the 15th of June to the 23rd of June you get a 61% retracement of the decline that was almost nailed exactly yesterday to the tick.  The fact that we failed up there at that level is not good in terms of keeping the uptrend going, and you will see what I mean in my third reason.

The third reason why we are likely in down mode now has to do with the volumes and the swing points. If you look at the chart and see where I labeled swing point ‘a’ and then swing point ‘b’.  Swing point ‘b’ tested swing point ‘a’ on 40% LESS volume and then closed under that level.  That is the classic definition of a sell signal when you are working with price swing points and volume.  The ‘b’ swing point tested point ‘a’ only with one tick which is pretty amazing. The high of swing point ‘b’ was 93.23 and the high of swing point ‘a’ was 93.22.  Sometimes they get tested on just a fraction of a point, but those are still valid tests.

So I can tell you the fact that we tested swing point ‘a’ on 40% LESS volume, and also turned around right at the fibonacci 61% retracement level is a sign to me that we are going downtown and we will probably break support for a deeper correction.

The two highest volume swings on the lower end of this trading range are 244 million and 182 million.  The June 23rd level is the first upcoming test.

Right now it is 3:30 PM and we have yet to see what the downside volume is today on the SPY ETF.  But so far it looks like a pretty bad sign of weakness and more downside to come…

Here is an early morning update on the Emini Futures (September Contract).  Shown on the left is the September contract.  Right now at 7am they are up about 6 points or so.

Looking at the little chart of the emini futures to the left it appears that there is a general tendency towards an ascending triangle since the first part of May.  This really could be a huge bear trap in the making.

The sideways consolidation that we have had so far since early May has been quite orderly looking to me.  We are not really giving that much back in terms of price.  So at least for now I can only presume that the bulls have the upper hand still despite all the current talk of a larger correction.  Of course my whole argument is going to be invalidated on a break down in the emini futures below that lower red boundary line shown on the chart that makes up this somewhat odd looking ascending triangle pattern.

But indeed this would be quite a bear trap if we are able to get a good strong jump ‘over the creek’ of the 922 level and hit all sorts of buy stops up there.  I haven’t been talking to too many bears lately (sounds funny doesn’t it?) but my sense is that the bears think we have come too far too fast and that the old bear of 2008 needs to get us back down again.

But it just does not look like that is in the cards quite yet. Indeed, if we manage a breakout on the emini futures above that red horizontal line as I suspect, it could lead to quite an extended move. Why? Because the nature of the recent correction has been quite tame and we have to assume internal strength in the market right now in my opinion.

There is another subtle point I should make about the pattern in the chart above. That green shaded area looks a little bit like an inverse head and shoulders pattern. If true then it has measurement implications to about 950 or the top of the false breakout range that starting beginning of June.

So do we get the breakout in the emini futures or not? Well hold on to your seats, maybe we will know by next week, and if we are really lucky by the end of this week.

Before getting a good read on the FAS I like to see what the SPY ETF is doing.  In my opinion right now the general structure of the broad market still looks constructive.  We have been trading sideways for about a couple of months. Not only is this good cause but so far we have not given back that much ground which is an even better sign. That is not to say we can’t go into a deeper correction, I am certainly open to that, but as of right now things look more constructive to me and we are in a tight trading range.

Zooming in on the action of the SPY you can see from the two red arrows I have drawn that the SPY has tested the gap of about a week ago and this gap, instead of being heavy resistance on a down trending SPY, served as a breakthrough point.  Volume expanded by about 16% into that gap and to me is a short term bullish sign and opens the door to the SPY testing the top of the recent 2 month range.

This is a holiday week so we will have to see what type of effect that has on overall volume for this week. Perhaps the true story will not really be told until early next week.  The market just seems to have a habit of taking its own sweet time.  So lets let it do what it wants and give us a verdict by next week. If we are lucky then we will get a verdict this week.

Speaking of verdicts, the FAS ETF is also looking somewhat constructive to me right now. The FAS 3x Financial Bull Shares, similar to the SPY has been consolidating in about a 2 month range.  The consolidation in the in the FAS resembles more of a falling wedge than a rectangle formation. 

So my bias right now near term is bullish. I have no idea if we are going to be able to get enough momentum this week to make a move out of this pattern on the FAS.

A breakout could be activated by a price move to and above 9.72 on the FAS.  This could correlate with bulilsh action the SPY as mentioned above.

The FAS may bump its head on the top down trend line of the falling wedge and consolidate for a day or two before deciding what it wants to do.  If we do not hold firm price support up in that pocket then it opens the door to a move back down to the bottom of the falling wedge near the 8 level.

This FAS is really tough to grab by the hands. It is like a slimy little fish you just pulled into your fishing boat and then tried to grab with your wet hands. That’s how this baby trades.  And the most deviant thing I can think of FAS doing this week is gapping up above the downtrend and then just running. Certainly possible. But for now we will have to see if a breakout can get activated starting from the 9.72 level.

Peace. I’m out.

HAYZ has essentially been priced at bankruptcy a week ago when it was trading at about 3 cents.  This stock is essentially a penny stock now which is pretty astonishing considering their total trailing monthly sales are roughly at 2 billion.  The market capitalization of this company right now is about 15 million.  I have seen plenty of OTC BB and pink sheet stocks with basically no business operations with market caps of about 15 million. Wow. What a beating this stock HAYZ has taken.

But you probably know by now that I try not to dip my fingers too much into the fundamental cookie jar.  I would much rather try the technical take and base most of my judgment on that just to keep my sanity.  Having said that, you should know that earnings call is scheduled for April 6th, 2009 and that date may serve as a catalyst either up or down for HAYZ.

HAYZ has made an enormous run from .03 to 18 in the last couple of weeks.  That is an astounding run and it seems clear that this type of move needs some more consolidation. I am watching it and looking for possible entry points in the .10 to .12 area.  I am going to have to watch it closely to see the nature of the consolidation we get.  In some cases you just get very minor retracements and then continued big moves higher, especially in very oversold fire sale type situations which we seem to be in now.

HAYZ has a few things good going for it right now from a technical perspective. For starters we can see that the 13 day simple moving average is about to cross over above the 50 day simple moving average for the first time in a long time.

Secondly, we see that the recent move in HAYZ has a massive amount of volume accumulation.  Also, in the month and a half previous to this there was already a significant amount of volume accumulation.  I think it is fair to say that the entire float has already been turned over (float is roughly 100 million) in the last month or two.

Lastly, and this is key, we see that HAYZ has tested the .18 price level on a volume swing high that tested a previous swing high on higher volume by a FACTOR of 8.  I am approximating the factor of 8 volume increase.  But I can tell you that it is at least 600% higher.  The two swing highs I am referring to are pointed out in the chart with the orange colored arrows.

When a stock tests a previous swing high on 600 to 800% higher volume it should get your attention because to me it says that the .18 price point will not only be exceeded but exceeded in a big way.  It is saying that we should eventually break through the .18 level and blast higher.

But we have the earnings call on April 6th to contend with before then.  Volume has dropped dramatically since the first up surge, so now I think it is reasonable to expect some sideways drifting and consolidation before April 6th.  Perhaps we might make a shakeout to the .10 area once again and build some sort of sideways pattern.  I am going to watch this one closely.  If it is strong enough, it may break .18 sooner than I think and I may have to enter at .18 or slightly above.  The more preferred strategy is to enter on a low volume retest of one of the price swings we did 4 days ago. 

Definitely a very high risk setup! But for now and at least as of the date of this posting I like the setup!

The market is still looking quite constructive to me given the recent price action. From the chart above you can see that the market at least as represented by the SPY ETF is still contained within a long down trending bear market type channel despite the positive last 2 weeks or so positive price action.  There are a few different ways of looking at this however as you can see from the next chart.

The dashed blue line in both of the charts above is quite a significant level of price resistance (supply).  We do seem to be bumping our head on this level right now.  However in contrast to the first SPY ETF chart, you can see from the second chart that the SPY has managed to break through the more near term down trend line with a sign of strength (SOS).  In addition one can make the case that a small head and shoulders bottom formation has formed or is forming which could have price projection to slightly under the mid 90’s area.  So it seems we have a market that is trying to works its way higher but still with the challenge or overcoming the dashed blue resistance level.

If price simple is able to hold sideways to slightly down from these levels, it could keep the case going for a break through of the resistance level.  The near term down trend line in chart two may act as minor support here.

We will just have to see how it shakes out from here.  My take for now is that we will be able to build enough energy to break through the blue resistance line and power higher.  This result could be from the benefit of the inverse head and shoulders bottom formation.

Also, on other thing to keep in mind at this point is that we have only have 5 days left in the month of March.  That will give us our monthly closing price bar and quarterly closing price bar.  This is important because if we can get a close in the next 5 days that is near these levels or higher, based on the monthly chart it could point to explosive upside price implications for April, 2009.  The other factor is that we have end of month and end of quarter window dressing effects during the next 5 days.

So why did I sell today?  We are coming up into the top range of a resistance channel.  It is possible we could blast right through it, but you know what? I don’t care because 35.4% is quite acceptable and again… I just don’t want to be a pig.

By the way, I don’t know how many actually follow along here, but if anyone is actually following my trades or looking for signals keep in mind that it is very important for you to do your own due diligence on any potential trades.  But I have to say flat out that sometimes there may be slight delays between the time I actually execute a trade (either a buy or sell) and the actual time that I write about it on here. Actually, sometimes it may be much more than just a slight delay.  Perhaps at some point this will change but for now that is the protocol.

It is pretty amazing how things have changed in only about a couple of weeks.  Before 2 weeks ago it seemed like the end of the world.  But now it looks like a massive global reflation is taking place and commodities are leading the way.  It seems that commodities will lead the way up in this reflation and then stocks will follow, that seems to be the pattern right now and crude oil is no exception.

Right now the SPY ETF continues to show near term strength and follow through on the day of the fed announcement later on today.  This has been quite a persistent rally and I suspect has caught many off guard considering how bearish and bleak things were looking only a couple weeks ago.

I have to admit it absolutely fascinates me how at one point the market can be projecting a total end of the world scenario but then only a week later it seems like we are all in heaven and nothing but optimistic about the future.

Anyway, we do seem to be coming up on a crucial juncture at least with respect to the SPY ETF, the proxy for the S&P500 index.  You can see in the chart to the  left that we have a respectable down trend line that has its formation based on the January 6, 2009 swing high and then the February 9th, 2009 swing high.  We are only a couple points away from touching this down trend line again, this time for the third time.

The relative strength index is in an area that in bull markets is still somewhat modest, about the 50 to 55 level.  But if we are still in a persistent bear trending market then this RSI level reflects an area that would be a typical turning point before moving down again.

So what do I expect next?  Well I think we have a good shot at making it up to the 80.5 area on the SPY ETF.  That would put us right under this down trend line resistance point.  At that point I would expect us to enter some sort of retracement phase perhaps down to the 75 area?  the nature of that retracement will have to be watched carefully to see if price can hold ground and volume stay light.  If it manages to do that then it opens the door to another attack on this down trend line and possible eventual break through it.

At this point I would not be surprised to see us break through it.  Oh, and by the way we need to pay attention to the last 2 weeks of March because that is going to give us the MONTHLY closing price bar.  So far it looks as though the March monthly closing price bar could look very bullish which would bode well for April.  I will keep track of this and do an update post on it later.

I would not be surprised to see us break through it based on a long term article I wrote on the Dow Jones Industrial Average.  But anyway for now lets not chew on too much and just focus on this down trend line and the behavior around that area.  It is best to take this market one small battle at a time, otherwise a bit too much brain damage starts to kick in!

The gold market is a peculiar type of market since I have been watching it from 2003 onward.  It tends to have big spike up rallies but then big retracements only to be followed by another big spike up rally.  It is also a small market compared to most others and at least so far I have noticed that the mainstream public does not appear to be fully participating in this market in any meaningful way yet.

So there should be lots of interesting things to come in that sector going forward from a technical perspective as well as from a grand public perception perspective and investor psychology as well.

Perhaps you have heard the term ‘gold bug’… those devoted followers of gold who have a real passion for the sector and to a certain degree turn it into a religion.. I do not fall in that camp, at least not yet.  Any time one mixes fervent passion for a market it just seems like it is an accident waiting to happen.  Better just to jump along for a ride in anything, whether it be real estate, tech stocks or gold and then jump ship before everyone else does.

We are here to make money, take money and then go home. That’s it end of story.

So again all gold discussion from now on will occur over at letsgold dot com, not here at bestonlinetrades!