In 2015, Cameco Corporation took the crown of the world’s largest publicly traded uranium company. Ironically, in terms of its stock price, 2015 was not among Cameco’s best years. The same could be said about 2016 and, in fact, the 2007 all-time high of $56 a share seems like a distant dream. The decade-long bear market in the uranium market is taking its toll. Shares are currently trading near $10.75, recovering from a plunge to as low as $7.40 three months ago. Is this a “dead cat bounce” or the start of something bigger? Let’s put the Elliott Wave glasses and take a look at the chart below.
The monthly log chart shows Cameco stock’s entire development since the low in April, 2000. It appears this was the starting point of a five-wave impulse, marked as wave (1), which lifted the stock all the way up to $56 a share in mid-2007. But according to the theory, a three-wave correction follows every impulse. That is what we believe has been going on during the last ten years – a W-X-Y double zig-zag correction in the position of wave (2). Once a correction is over, the larger trend resumes in the direction of the impulsive pattern. Here, Cameco’s 5-3 wave cycle is pointing north. In 2007, everyone loved Cameco, just when it was about to crash. Now, investors would not even touch it with a stick, but in our opinion, the current environment has removed the risk of crash and provides the unique opportunity to own an industry leader. If this is the correct count, Cameco’s future is bright. In the long-term, the 2007 top is there for the bulls to conquer.