Stalking The Uranium ETF For A Potential Buy [Global X Funds]

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March 4, 2014 12:23pm NYSE:URA

sellbuyMorpheus Trading: With our market timing model remaining in “buy” mode, our current focus primarily remains on leading individual stocks.


Tesla ($TSLA), for example, is now showing an unrealized gain of 68% since our December 31 buy entry. SolarCity ($SCTY) is similarly up 56% since our December 19 buy entry.

However, despite strength in leadership stocks, we have also been noticing a stealth sector rotation of institutional funds flowing into various commodity ETFs.

One such ETF we are stalking for potential buy entry in the coming days is Global X  ETF (NYSEARCA:URA), which is shown on the weekly chart below:

$URA VOLUME AND PRICE BREAKOUT

$URA blasted through the high of its prior trading range and 40-week moving average, on volume that was about 400% greater than average. High volume on a breakout is important because it confirms the presence of institutional accumulation.

Additionally, $URA closed near its high of the most recent week. The 10-week moving average crossed above the 40-week moving average as well, which signals a bullish reversal of trend is under way.

Since breaking out above its recent highs on heavy volume last week, the price has been consolidating for a few days on declining volume. Lighter volume during bullish consolidations is positive because it indicates the sellers are not stepping in while the bulls take a rest. This can be seen on the daily chart pattern:

$URA continuation breakout

From here, we now expect about five to ten days of sideways action before $URA resumes its uptrend. Zooming into the shorter-term hourly chart interval, we see the price action is holding above the 20-period exponential moving average:

$URA tight consolidation on hourly chart

The 20-period exponential moving average on the hourly chart is usually the first legitimate support level on a pullback after a strong breakout.

The strongest breakouts will hold support at the 20-period exponential moving average and then push higher. But if that moving average fails to hold as support, then a touch of the 10-day moving average is the next logical support level.

Because of the confirmation through multiple timeframe analysis, we are now stalking $URA for potential swing trade buy entry.

This article is brought to you courtesy of Morpheus Trading, LLC.


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