It wasn’t just Big Tech and crypto, which had a good one in 2023. Canadian uranium mining company Cameco Corp. was up by over 100% at one point last year, before finishing with an 89.7% gain. The world is slowly but surely coming to the realization that climate change cannot be solved without nuclear energy. Even Japan is bringing its reactors back online more than a decade after the Fukushima disaster.
Uranium ore prices surged alongside the optimism for the industry and took mining companies’ valuation up with them. And 2023 wasn’t the first good year for Cameco. The stock is up 693% since bottoming at $5.30 in March, 2020. Alas, the investor of today cannot profit from yesterday’s uptrend. Can we expect more upside from CCJ over the next twelve months? Because of the Elliott Wave chart below, we’re rather skeptical.
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A careful look at Cameco ‘s daily chart reveals two impulse patterns, labeled 1-2-3-4-5 each. Impulses generally point in the direction of the larger trend. The problem here is that there is a triangle pattern in between them, marked a-b-c-d-e. Triangles precede the final wave of the larger sequence. In this case, this means that the larger structure is an A-B-C zigzag correction, where waves A and C are impulses. The triangle separating them fits into the position of wave B.
If this count is correct, December’s weakness is likely a prelude to a much bigger decline ahead. The support near $30 a share looks like a natural downside target. If it fails to stop the bears, we might see Cameco stock testing $20, as well. Either way, $42 seems unsustainable. And not only from an Elliott Wave standpoint. Analysts estimate that the company can make $1.28 in earnings per share in 2024, bringing its forward P/E multiple at 33. Far from cheap in our opinion.
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