Why Uranium Stocks Are Weaker Than They Look

 About a month ago, I started to think that some of the uranium and nuclear stocks might be in the process of putting in a bottom. At the time, the selling pressure appeared to be easing and price action was starting to stabilize. Since then however, the message from the market has changed, and what has been unfolding over the past few weeks is something I want to focus on, relative weakness.

Above, I’m looking at a daily chart of URA. Below that is the SPY on a daily timeframe, and in the bottom pane is a ratio line of URA versus SPY. When I compare these two, the divergence becomes clear. URA has been making a series of lower highs, marked at points A, B, and C, while SPY continues to print higher highs. That’s a classic warning sign. When the broader market is pushing higher and a sector can’t keep up, it usually means there’s consistent selling pressure beneath the surface.

If you only looked at URA’s price chart in isolation, you might conclude that it’s simply moving sideways. Over the last four weeks, price has gone nowhere, chopping back and forth in a range. But when I view this through the lens of relative strength and relative weakness, the picture becomes far more bearish. Sideways price action during a rising market is not neutral, it’s a sign of underperformance.

The ratio line in the bottom pane really drives the point home. URA versus SPY is now breaking down to a new swing low before price itself has broken support. This is something I pay very close attention to. When relative strength deteriorates ahead of price, it often acts as an early warning that lower prices may be coming.

We’re already seeing confirmation in individual names. Stocks like NNE have broken down first and is now leading to the downside, which is often how sector-wide weakness begins. Leaders crack, and the rest tend to follow.

If URA breaks minor support near 42.63, I think the path of least resistance points lower, and we could see additional weakness in the days ahead. For now, the takeaway is simple, what looked like a potential bottom a month ago has turned into a clear case of relative weakness, and that’s something I’m not willing to ignore.

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