CCO

CCO Cameco

Hamilton

cco mar 2011 2 cco mar 2011

Cameco is, I think , is the worlds largest producer of fuel for nuclear plants. It has had a few flooding problems of its own at the Cigar Lake mine etc.etc. but apart from that it is still the big boy in the sand box. They are like Potash Corp., they even hail from the same province and are neighbours in a manner of speaking.

The Japan tragedy has caused a knee-jerk reaction against nuclear power. Mirroring that the market is now rather fond of solar gadget producers like FSLR. Both are probable misplaced! Nuclear power contributes somewhere between 15% at the low end to 70+% at the high end (France) of the worlds needs for electricity. As it stands there is no known alternative, even if they may one day change to a less belligerent  fuel (thorium as opposed to uranium ?). Solar on the other hand has a bright future but probable not in the next 3/5 years. Our Canadian government, as so many others, has agreed to feed-in-rates that are sometimes a tenfold of the actual costs. Rather than confess their sins they prefer to stall the system by way of administrative delays, hurdles etc.etc. There are untold numbers of farmers etc. that have installed a small fortune on their roofs only to find out it may take 10 years for the connection to the grid! Most of the producers are inefficient but free markets have not prevailed and some of these companies are going to be decimated.

My guess is that CCO is a buy at about $23. By the way, UEX, UUU,and DML (Denison) all have similar chart patterns.

CCO, Cameco

Hamilton

CCO 2011 feb

A picture is worth a thousand words! Do we know anymore than the next guy where this is going? Of course not. But we can see the following;

1. The stock has retraced about 62% of the drop in 2009. This does not imply that it cannot go higher, but it does tell you that you could be at a critical point of sorts.

2. The drop in 2008/9 is a distinct a-b-c. Typically these are retraced to the level of the b-wave, in this case just around $43 where you are now.

3. Retracements, either up or down often take the form of a-b-c and very often the relationship between the c and a wave is one of equality, i.e. c=a where we are now.

4. Applying the buy low , sell high rule, it is pretty clear that we are more in the high than low range.

5. We could be in a 5th wave up, on our way to $70 or higher. This is certainly not impossible but nevertheless unlikely. In this scenario the drop from 1996 to 2000 would be a wave 2 and the drop in 2008/9 a wave 4. The problem with that is that there is no alternation, not impossible but still a very low probability scenario.

This is a stock that should be exited, plain and simple. See previous blogs

CCO May 5

Hamilton

Cameco is the largest uranium miner in the world. It is a little water logged but that problem will pass. For the moment nuclear energy is the only big scale realistic solution for the energy problems of the world so demand for its product presumable will continue and expand.  The chart supports that (long-term view). Here it is in the big picture.

CCO May 5

At first blush this is a initial first wave followed by many years of downward movement in wave 2, perhaps while the Russians were decommissioning there submarines and other rusting toys, followed by a third wave up. I assume it is all a third wave simple because the structure suggests it and there are a distinct 9 segments (5+4). That is followed by (perhaps incomplete) wave 4, which so far is a very clear a-b-c, where c is more or less equal to a. In this count wave 4 cannot overlap wave 2 and indeed it does not, 12/13 for wave 2 and 15 for wave 4. The risk in buying CCO was therefore very low at $15. Here is more detail.

CCO may 5 2

Notice that wave C is more or less equal to A. The exact termination point could be argued but either way this has the potential to go at least to $45 or even new highs  OVER TIME. At this very moment it appears a little overbought given the RSI and MACD but give it a week or so it still looks like we are in a small 3d wave up, so despite ,perhaps ,a few dollars pull –back I suspect we go on for a little while yet. The real critical point is around $31+, if it can breach that (overlap) the world opens up for higher prices. Depending where one owns this, it may, in a zero cost environment, be sensible to sell here and buy again at $32 (something I have great difficulty actually doing).

Long term, as in this count waves 2 and 4 do not alternate, thought should be given to this wave 4 becoming a multi-year triangle. We are in that scenario in wave b of an a-b-c-d-e sequence. This b should get to about $50.  DML is an alternative at a lower cost but not as robust.

UUU May 5

UUU, click to enlarge, suggests that there is still some room ahead immediately, also lower that $1 is about as bad as it can get coming from $18. There are probable others in this space.