Uranium stock Atha Energy Corp (SASKF:OTCMKTS;SASK:CA) has done well since we bought it in early and mid-December, as it has since broken out and risen steeply to form the right side of a Cup pattern, as we can see on its latest 4-month chart below.
This rally brought it up swiftly to resistance at the September – October highs, where it has stalled out partly due to the big uranium stocks like Cameco Corp. (CCO:TSX; CCJ:NYSE) correcting back following strong runs.
So the question for us now is whether "that's it" and it will now react back much further as it did following the September runup or whether it will marshall itself to bust through the resistance at the September – October highs.
Although not the easiest call to make at this juncture, I believe it will do the latter for the following reasons.
In the first place, it looks like the larger uranium stocks will soon embark on another strong upleg following a normal correction within an ongoing strong bullmarket. Fundamentally, the uranium price bottomed in November 2016, and it has been trending strongly higher ever since, with many countries planning to ramp up electricity production from nuclear.
The problem for North America and the U.S. in particular is that almost all uranium has to be sourced from countries in Asia with which it is not exactly on friendly terms, to put it mildly. Enter Atha, which holds the largest cumulative exploration package in the Athabasca Basin, the world's most prominent basin for uranium discoveries, with 3.4 million acres which it plans to drill for the 1st time this year.
So fundamentally, the outlook for the company is bright. Technically, if we look at the 11-month chart below, we see that the price is now better positioned to break above the key resistance in the CA$1.22 – CA$1.30 zone than it was in September – October. Even though the attack on this resistance back then failed to break above it, what it definitely did do was drain off a considerable amount of the overhanging supply at this level, dating back to the extensive trading in this area from April to early July of last year.
In addition, the price has just completed marking out a bullish Cup pattern. So, with the larger stocks in the sector looking set to advance anew after a period of correction, this is a good time for Atha to "go for it" and break above this resistance, which would mark the start of a bullmarket in the stock.
So, if we refer back to the 4-month chart again, we see that there has been a very marked dropoff in volume as the price has reacted over the past week. This is bullish and implies that rather than the price forming another intermediate top as in September - October, it is instead completing a bull Flag whose prospective boundaries have been drawn on the chart. If this interpretation is correct, then it should take off higher again very soon and break above the key resistance.
We, therefore, stay long, and this is regarded as another good point to Buy or add to positions.
Atha Energy Corp.'s website.
Atha Energy Corp. closed at CA$1.15, $0.85 on January 5, 2024.
Originally posted on Clivemaund.com on January 8, 2024 EST.
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The above represents the opinion and analysis of Mr. Maund, based on data available to him, at the time of writing. Mr. Maund's opinions are his own, and are not a recommendation or an offer to buy or sell securities. Mr. Maund is an independent analyst who receives no compensation of any kind from any groups, individuals or corporations mentioned in his reports. As trading and investing in any financial markets may involve serious risk of loss, Mr. Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications. Although a qualified and experienced stock market analyst, Clive Maund is not a Registered Securities Advisor. Therefore Mr. Maund's opinions on the market and stocks can only be construed as a solicitation to buy and sell securities when they are subject to the prior approval and endorsement of a Registered Securities Advisor operating in accordance with the appropriate regulations in your area of jurisdiction.