Weekly Update: The Markets are Stalling at the Highs
The markets are stalling at the highs.
Stocks advanced this week, erasing last week’s losses and sending the major indexes back to all-time highs.
This is about what we were expecting. Markets have now been range bound for four weeks which, as I have discussed previously, is healthy price action.
The November/December rally was one of the strongest on record. A move like that must be absorbed to flush out the sellers, allow for natural profit-taking, and set up the next advance higher.
The S&P 500 and Nasdaq indexes are both sitting at their all-time highs from late 2021 – a natural place where we would expect to see a pause.
The Russell 2000 small cap index shown below has the most ground to make up before reaching new high ground.
I still expect small caps to outperform in 2024, and I have allocated my retirement accounts accordingly.
The homebuilding sector along with biotechs continue to show the most relative strength. But another group is again marching to the top of the pack…
Back in November, we highlighted the nuclear and uranium sector as a standout in terms of performance.
Based on this, we bought Cameco (CCJ) and enCore Energy (EU) – two leading nuclear stocks that were breaking out from consolidation patterns.
Both delivered stellar returns.
The sector pulled back in December, but we are again seeing these stocks advance higher. Both of the names I just mentioned made new highs on Friday.
I keep a Nuclear/Uranium stock watchlist in TradingView. There are 24 names on it.
If you want to create your own watchlist for this sector, here are the ticker symbols: CCJ, UUUU, DNN, LEU, UEC, URG, BOE, PDN, BMN, UROY, NXE, SMR, BHP, CVV, AMLI, LTBR, CEG, NRG, FCU, UCLE, MGA, ISO, BWXT, and BKY.
Most of these are US stocks, but a few trade on foreign exchanges. They also range from small to large in terms of market capitalization.
I did a quick scan of the charts and here are my favorites right now:
Denison Mines (DNN)
Dennison broke through its downtrend line with conviction on Friday. Shares finished up 10% on the day, closed at the high of the daily candle, and made a new 52-week high on the highest volume in over a year.
This is a clear sign of institutional buying.
The stock also pulled back quietly in December, giving up minimal ground and showing no signs of heavy liquidation.
Ur Energy (URG)
URG also broke out on record volume Friday.
After a beautiful uptrend from July through September that saw shares advance 77% in as many days, the stock has been consolidating for the last three months.
Friday’s move to new highs could be the ignition URG has been needing to resume its rally.
NRG Energy (NRG)
With a market cap of $11.4 billion, NRG is one of the larger stocks in the group. Because of that, it is much less volatile and has shown to trend more steadily.
As of today’s close, the stock is sitting on its 21-day moving average. This has been a support level for NRG throughout this move, making this an ideal buy point on the pullback.
IsoEnergy (ISO)
ISO is a small-cap uranium mining company based in Saskatoon, Canada.
Like some of the other names in this group, the stock has been consolidating for the last few months. Friday’s high-volume move broke through the pivot level, signaling that the market has finally worked through supply.
If this uptrend in uranium stocks continues as expected, ISO could see a substantial move higher in a short amount of time.
Best wishes for your trading,
