Almost regardless of the macro backdrop, some commodities get popped and dropped, Whack-a-Mole style.
Whether the bigger picture backdrop is constructive or not (currently it is not), many commodities (and especially the outliers like Uranium) get played aggressively and then dumped just as aggressively. I picture roving hedge hogs (hedge funds, machines, nefarious operators) slamming a given sub-segment, getting the fundamental dorks all revved up, and then dumping hard as said dorks bite.
From NFTRH 843, after I’d missed a spike in my favorite Uranium stock, NXE:
Get the direction of the US dollar and Gold/Silver ratio right and you’ll probably get commodities right, as a whole. Meanwhile, the traditional “commodity Whack-a-Mole” game is in effect. That is when one commodity pops its head up and summarily gets its head bashed back down (e.g. Palladium back in October and NatGas last week).
Most recently, the Uranium sector popped last week. URNM is in the process of changing its trend from up to down while CCJ maintains a mild uptrend. Favored U stock NXE put on a big spike and is trending sideways. It feels like Uranium is getting played by the hedge hogs, who’ve left the PGMs and Gas behind. But with the bigger picture fundamental view very positive, that view could morph back to bullish at any time.
Sure, Uranium could swing back to a valid bullish phase at any time due to its structural positives on the big picture of the modern world. But to this point, it looks like another edition of Hedgehogs Gone Wild. Here’s NXG giving back nearly all of the spike gains. Believe me, I was prepared to have a case of FOMO had it kept going. But NXE is trending neutral at best and the sector (URNM) is in a moderate downtrend.
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