On the left is the expected trajectory for Lundin Mining as of the end of Feb. On the right is what we got to date. The stock, as apparently is “normal” in these bullish times, went right to the maximum of $9+. Then it crumbles despite two take-over bids; it should continue lower, perhaps much lower. Click on the charts to enlarge.
It is quite possible that no further moves down are coming; the red line connecting the lows may have done its work by providing support. A look at uranium itself makes this very plausible;
According to InfoMine.com the stuff hit a low of about US $ 40 per pound around June of 2010 well before anything had happened at Fukushima, Japan. Recently China’s nuclear Energy Association announced that it will boost atomic capacity 8 times by 2020. India announced a similar expansion of production of electricity using nuclear fuel 13-fold by 2030.All of this should lead to a doubling of the demand for the fuel, never mind what other countries will do.
This is our favorite instrument. $8 was always an interesting point as that is where the inverse HXU traded at the lows in March of 2009, see below;
A difference of only $0.08, and it has now held for the better part of two months. And the HXU did a fairly straightforward A-B-C, which, by definition , is a corrective move. I think the time has come (or passed already) to buy the HXD. even at today’s price of about $8.65 or so. The Fed etc.etc. can not continue this shell game. The simple reality is that the world has mis-allocated roughly 3 trillion dollars or more, perhaps a lot more. By kicking the can down the road time is won but the question remains – as always – who is going to pay, bondholders, equity holders or taxpayers. Inevitable there will be a very serious headwind when we find out.
In January we recommended buying this stock as the e-wave of the triangle was still unfolding. It made a low of $4.12 but lets assume it was purchased at $4.25 so at today’s $5.50 you are up about 30%. The stock should go higher, in fact this is more or less the time when something should happen to accelerate the advance. No idea what that may be, take-over talk, anti-trust rumblings around that other take-over, CRTC meddling or perhaps they will find a way to burn water. Whatever it is it should happen soon. Ratchet your stop-loss up and wait for a sell at about $8.