UEX Corp. Still Looking Strong

02/03/05 08:35:17 AM

by Kevin Hopson

As expected, UEX bounced off key support recently and is once again in rally mode. So what is next for the stock?

Security: UEX.TO
Position: N/A

I touched on UEX Corp. (UEX.TO/UEXCF.PK) just a couple of weeks ago. At that time, the stock was starting to pull back from a sharp rally. Because there was a significant confluence of support around the C$2.50 level, I opined that an attractive buying opportunity could present itself there. In addition, the triangle breakout -- as illustrated by the purple trendlines -- still pointed to much higher prices. More specifically, my upside target was (and still is) C$3.50.

As you can see in the six-month chart (Figure 1), UEX bounced off support at the C$2.50 level, just as I anticipated. This was the site of the black median line, the stock's short-term moving averages, and the 38.2% retracement level from the December-January rally. Now that UEX has proceeded to rally, the stock is once again finding resistance around the C$2.90 level. This resistance level first came into play when UEX tested the top parallel line of the black pitchfork in mid-January. Since then, prices have stalled out here.

Figure 1: UEX. As you can see in the six-month chart, UEX bounced off support at the C$2.50 level, just as anticipated.

Graphic provided by: StockCharts.com.

However, note how UEX has been putting in a pattern of higher lows, effectively forming an ascending triangle. This is illustrated by the green lines. Because ascending triangles tend to break to the upside, I think it is just a matter of time before UEX breaches resistance here. When and if this occurs, it should pave the way for another significant rally. As a result, I remain optimistic on the stock and would continue to hold shares of UEX Corp. in anticipation of higher prices.

Kevin Hopson

Kevin has been a technical analyst for roughly 10 years now. Previously, Kevin owned his own business and acted as a registered investment advisor, specializing in energy. He was also a freelance oil analyst for Orient Trading Co., a commodity futures trading firm in Japan. Kevin is currently a freelance writer.