With a renewed push for clean energy around the globe, the Uranium market began to see a material increase in demand in 2020 that has followed us into 2021. While the focus of wall street has been on other renewable energy sectors like solar and hydro power in 2021, many of the leading stocks in these sectors have advanced substantially. Fact remains, while these other sectors might be “sexier” many nations lack the resources to pivot towards these energy sources, which leads me to believe that the demand in the nuclear energy space is here to stay which should push valuations for producers substantially higher in the coming years.
I will review the chart for the Global X Uranium ETF which holds a basket of 39 producers.
Long term outlook (monthly chart):
Halfway through the secular bear market spanning over a decade the down trend began to decelerate and flatten forming a descending wedge on multiple time frames but seen most clearly on the monthly chart, this pattern was broken out of in July 15,2020 and back tested from September to the end of October, before advancing over 100% to current levels. The long-term secular trend higher appears to be in the early stages.
Medium term outlook (weekly chart):
The weekly RSI (relative strength index) is elevated at 76 but may extend to 90-95. We have seen an acceleration of price in recent weeks and an increase in options activity, which tells me this idea is starting to gain traction among investors.
Short term outlook (daily chart):
Momentum is pointing higher short term, the daily RSI does not yet show an overbought rating, there is a rising resistance to be weary of but this should not call for concern when considering a long term allocation.
2021 price target: $12.00+ 2022 price target: $20.00+
2021 price target: $15.00+ 2022 price target: $30.00+
2021 price target: $1.25+ 2022 price target: $3.00+
Note: Targets are arbitrary, and ultimately based on past as well as current valuations and returns of previous secular bull trend.