Chart of the Day: This Nuclear Energy Name Could Bounce Back
The ETF was sold off sharply last week but is setting up for a buying chance.
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There was little escape from the carnage that occurred on Friday and within the damage was energy stocks, specifically nuclear and uranium.
The VanEck Uranium and Nuclear Energy ETF NLR fell sharply on heavy turnover. The ETF, which has some wide ranges and big moves broke a support line (shown in the top pane below) on higher volume than the prior day. That is called distribution, where big money managers are selling the ETF and not returning to buy the stock.
We can point to any reason for the selling, but there are always a million reasons to sell but only one reason to buy. The indicators are bearish, note the weakness in money flow (bottom pane) as it crosses the zero line. MACD (moving average convergence/divergence) is already on a confirmed sell signal, and the ADX is starting up again. This tells us the strength of a trend but not the direction, so if it is down the trend is starting to strengthen and could be intense.
Is this dip a buying opportunity? Not quite yet, but as we approach the lows from December, we could certainly see some buyers stepping up if the ETF can stop going lower.
We like the NLR and rate it a two in TheStreet Pro Portfolio, stockpile on pullbacks.
