Of all of the minerals that publicly traded mining companies mine, Uranium has to be one of the least talked about of the bunch. Perhaps this is due to the number of regions in the world in which it is found, or the lack of a robust portfolio of publicly traded Uranium companies. Nevertheless, we have found one that we are very excited about, so without further ado, we’d like to introduce our newest pick; CanAlaska Uranium Ltd (OTCQB:CVVUF) (TSX-Venture:CVV).
Following an announcement last week pertaining to findings within the company’s newly acquired Geikie project, this micro cap started this week off with a bang after the company announced Monday that it increased a private placement financing round to total $11 million due to excess demand for the offering. This made shares pop up to close at $0.6222/share (+3.96%) on the day. It isn’t only these two announcements and Monday’s performance that has us excited, but rather the overall technical setup of the stock itself. Before we breakdown the risks associated with this play, first a bit of background is essential.
Background:
CanAlaska Uranium Ltd is engaged in the exploration of uranium, nickel, and diamond properties. Its project portfolio includes West McArthur, Cree East, NW Manitoba, Athabasca Diamond, Waterbury, Moon, Collins Bay Extension, Mouse Mountain Cu-Au, Patterson, McTavish, Key Lake, Thompson Nickel Belt, Kasmere, and Ruttan area Cu-Zn Project.
CanAlaska Trading Strategy:
Due to the recent success this stock has seen, in order to not miss out on any continued momentum, we like the entry at Tuesday’s open.
As far as support is concerned, this particular stock has a bit of a unique setup in the fact that the majority of all of its near term support is within a very tight range, creating almost a support zone. The 50-day, 100-day and 200-day SMAs all converged together at $0.47, $0.46 and $0.46, respectively. This is the main zone that will serve as support should there be a significant selloff. Closely following this is the mid-September low of $0.444, which served as an intra month price floor last month. Anything below this could indicate a drop is coming, so we have set our
stop loss at $0.44/share.
On the resistance side of the equation, because we’re so close to a multi-year high as it is, there are only two, very close levels that could cause some consolidation. Up first is the September high of $0.666. Immediately following this is the 52-week high of $0.675. Due to the recent company announcements and the momentum seen recently, we think these two levels will be left in the dust, which means nothing but blue skies for this stock after crossing these ceilings. We don’t want to get too carried away, but again we think this thing has room to run, so in order to not get caught up in the even $1.00 battle, we have set our price target at $0.99/share.
With these risk parameters in place and using Monday’s close of $0.6222 as the proxy entry price, this play is shaping up to have +59.11% upside while risking -29.28%. We anticipate this move occurring within the next five to seven months.
