Sunday, August 1, 2010

Second Bull Flag on CCJ

Focusing too much on the major indices is not a very smart thing to do if you simply want a good trade. See the trees instead of the forest, in other words. Since algo bots latch on to the indices and index ETFs and a few beta big caps on Nasdaq, some less-known individual stocks may be still relatively free of bots.

Here's one example. Cameco (CCJ) has been on my watch list for very long time. I invested in the stock once, from . I kept watching mainly for macro and fundamental reasons (Cameco is a uranium miner). Last I looked at the chart was more than a year ago, and the stock hasn't gone anywhere. It is actually back to where it was a year ago.

But if you just look at the short-term, it would have been a good enough trade.

This is CCJ's 9-month daily chart. It seems to be forming a second bull flag after breaking out of the first one. There is a positive divergence in MACD and RSI. Slow (very slow at 89) stochastics has already signaled a buy, when it crossed 20, and when it crossed 50. 13-EMA and 34-EMA have also crossed back, signaling a significant trend change.

The stock just passed 38.2% Fibonacci retracement from the July low to the January high. It could go to 50%. Between 50% and 61.8% there seems to be a lot of overhead resistance. If you had bought the stock when the slow stochastics crossed 20, you might be sitting now with 20% gain in a month. Not bad in a volatile market.

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