Market Radar 23. January 2023


From now on, tailwind instead of headwind?
According to market radar, almost all regions of the world are in the purchasable range. The ETF on the S&P 500 (SPY) is again receiving the daily stamp “Buy or Top-Up” for today, after being downgraded to “Under Watch” for one day on Thursday. The mark of 390 US dollars was recaptured in the US benchmark index on Friday; this should have taken “the wind out of the sails” of Wednesday’s short attack. The next few days will have to show whether the wind turns in such a way that we get tailwind instead of headwind.
Only one “bearish spot” left on the world map

India (INDA) receives the day stamp “Buy or top-up” for the first time in a long time. Indonesia (EIDO) is expected to be upgraded to “bottoming out or sideways” on Tuesday (currently still “under observation”). The only “bearish spot” on the world map is Pakistan. Here we have to wait and see; I don’t think it’s appropriate to speculate on sell-off because of the geographic market breadth with which the bulls now dominate almost all regions.

Russia, of course, is missing. The corresponding ETF (RTX), like the stocks contained therein, is not tradable for Americans and Western Europeans and is therefore not in my radar range. Nevertheless, today I took a look at the price development in the MICEX (Moscow Interbank Currency Exchange). Russian equities also bottomed out at the beginning of October and have been rising quite steadily ever since. At least in terms of chart technology, Russian equities would have to be given the green light.

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What do we see under the radar of the major stock indices?

I mentioned above the short attack last Wednesday that we saw in the major US stock indices. If you want to spot new trends in US equities early, you should now look out for which sectors have exceeded Wednesday’s daily high on Friday at the end of the day. These industries could become the leaders of the coming weeks.

Will uranium become an industry leader?
On the one hand, we noticed the ETF for uranium:

The corresponding ETF for uranium (URA) closed on Friday above the daily high of Wednesday – that had been the day of the short sell attack. At the same time, we locate a 4-month high in the chart. While most sector ETFs started the recent upward movement after January 3, the URA ETF was able to start the latest up-move before Christmas (December 20).

An early trend recognition can therefore be located here retrospectively. But that doesn’t help us traders. Because we are looking for the opportunities of tomorrow. Not yesterday’s chances.

A higher high became visible in the chart of URA for the first time on January 11th. This intermediate high was exceeded on Friday, so that now the bottoming phase could be completed according to simple Dow theory.

The URA ETF could now have sustainably overcome the horizontal resistance at 22 US dollars, which the ETF has struggled to overcome in recent trading days (closing price on Friday: 22.30 US dollars). The trading volume in the ETF was relatively high on Friday, so the increased willingness to buy supports our speculation.
Now let’s take a look at the market leader in the uranium industry:

The chart from Canadian-based market leader Cameco (CCJ; Market capitalization: $11 billion) confirms the movement in the uranium ETF. Cameco is also the highest weighted position in the URA ETF with a share of approximately 22%. The stock was able to “crack” the horizontal resistance around 25.80 US dollars on Friday with increasing trading volume. Spekulative Trader könnten am Montag diesem Impuls folgen und eine Position in Cameco aufbauen – sofern das moralische Gewissen mitspielt.

Uranium or coal ? Which industry do the stock market favor now?

By the way, some shares from the coal sector also showed a trend surge upwards on Friday. Arch Resources (ARCH; Market capitalization: $2.6 billion), Warrior Met Coal (HCC; Market capitalization: $2 billion) and Ramarco Resources (METC; Market capitalization: $500 million) closed above Wednesday’s daily high on Friday. The short float for these stocks is 13 (ARCH), 8 (HCC) and 6 (METC) respectively, so these stocks should only be of interest to short-term market-oriented traders.
Short sellers will know how to prevent the price development in these three coal stocks from changing into a trend-stable, longer-lasting upward movement.

In addition, larger players from this industry such as Peabody Energy (BTU; Market capitalization $4 billion) or Alliance Resource Partners (ARLP; Market capitalization: $2.5 billion) on Friday did not rise above Wednesday’s daily high.

In Peabody Energy’s stock, we see a short float of more than 10%. Stock market participants are already preparing for the end of the upward movement in coal stocks, which were among the strongest outperformers in the US industry universe in 2022. 

Those who focus on the topic of energy shortages should now prefer uranium to coal on the stock exchange.
The topic of energy scarcity upsets stock market more than the topic of climate change
As long as the topic of energy scarcity upsets the stock market more than the topic of climate change, shares from the uranium sector are likely to continue to be in demand.

Investors with foresight naturally prefer to look for their opportunities in stocks from the solar, wind power or hydrogen sectors. However, stocks from these future-oriented industries were humorlessly pushed down from Wednesday and could only twitch a little after this beating on Friday – we saw almost nothing of rebound fantasy in solar stocks such as Enphase (ENPH) or Solaredge (SEDG) on Friday.