Trade the Trend | Episode 5 

By Jason McIntosh | Published 3 September 2021

Trade the Trend is a weekly video focusing on where the stock market is going. It’s for investors and traders looking for insights to the market’s next move. Jason uses technical analysis and trend following techniques to help you piece together the world’s biggest puzzle.

Where is the Stock Market Going?

In this week’s edition: 

00:00 Intro

00:33 Where is the S&P 500 going?

01:35 Where is the Dow going?

02:57 Where is the Russell 2000 going?

03:59 Where is the All Ordinaries going?

05:08 Where is the Nikkei going?

06:41 Where are emerging markets going?

08:28 Where is Uranium going?

10:45 Is NorthShore Global Uranium Fund (NYSE:URNM) worth buying?

11:05 How to know when to sell?

17:13 Is Cameco (NYSE:CCJ) worth buying?

19:23 Is Yellow Cake (FTSE:YCA) worth buying?

20:27 Is Deep Yellow (ASX:DYL) worth buying?

21:20 Is Paladin (ASX:PDN) worth buying?

Where to invest now?

Looking for ASX stocks to buy now, as well as off the radar ideas most people don’t know? Our algorithms scan the stock market daily for medium term investment trends. We then tell our members precisely when to buy shares. And most importantly, we tell them when to sell.

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Transcript

Please note: Charts available from video

Welcome to this week’s edition of “Trade the Trend,” a weekly video discussing where the stock market is going. I’m Jason McIntosh. It is Friday, the 3rd of September, 2021. As always, this is a general commentary and doesn’t take your personal situation into account.

I’m going to be bringing these videos each week, covering the latest developments in the markets and focusing in on some of the opportunities and some of the trends that I’m seeing.

As always, if you like what you see, please hit that like button after the video. Look, if you haven’t already subscribed, please do so.

Hit the subscribe button, hit the notification bell, and YouTube will let you know when I upload a new video.

So, that said, let’s jump into the first chart. Okay. So we’ve got the S&P 500. Well, look, not a lot’s really happened this week. Last week, we left off with the Fed meeting over in Jackson Hall in the U.S.

It was just here. We just had that little down day leading into it. Look, the market liked what came out of it. We had an instant rebound in trading on Monday, just here, but really since then, the last few days have really been quite non-eventful.

Not a lot going on at all. And it’s just typical, quiet summer trading in the Northern hemisphere. You know, we get these periods, you know, we had another run of it through here.

You know, just not a lot going on. You know, going back through here, just tight ranges, typical of the time of the year. So, look, I don’t think we need to spend too much time on the S&P 500 today.

Trend’s up, and I think we need to expect the likelihood of further gains in the coming weeks.
Jumping over the Dow, look similar sort of story.

We’ve been keeping an eye on these previous highs for a while now. And other than this little dip just here, market’s holding nicely above it. Just thought it’d be interesting. We just jump across to an hourly chart.

So I want to focus in on this little congestion zone we have here. It’s interesting how you can see patterns emerge in all different timeframes.

Let’s just expand at a touch, and we’ve got this nice little triangle pattern, which has been developing, and, look, these are classic continuation patterns.

So, from a…look, a pattern like that, I’d expect to see something like…let me just change the scale of touch.

Look, I’d be expecting an upward break from this pattern probably next week, really. Maybe something like that is possible over the next few days. So that would take the Dow to a new all-time high.

I think that’s probably got to be our base case in the Dow that we’re going to see higher levels develop over the next few days, maybe over the next week or two. Jumping into the Russell, so this has been the point of concern, but at the moment, Russell is looking, you know, pretty okay.

This has been the congestion band we’ve been watching for…well, it’s been this for months now. And we look like we’re going to test it down here a couple of weeks back. We’re bounced nicely off that.

We’re well and truly outside the danger zone now. So I think that chances are…I think we’ve now got to start looking at scenarios where the Russell breaks up, breaks out of this pattern, breaks to the upside, and that we do see another run in global equities.

So what we could see here, we could see a test of those highs first, maybe a little reaction down off it. But then after that, really, I think that is now probably the favorite case for the Russell and that this global equity really does have some further legs in it just yet.

So let’s have a look at what the All Ords is doing. So here’s a chart I prepared earlier. It’s actually the same one from last week. I’ve just extended it out a little bit. Look, it’s much the same. The local market hasn’t done anything for the last three weeks now.

Whilst we were in the middle of this trend channel, the trend remains up whilst we remain above. Look, we’ve actually got a few points to keep an eye on, and they all come in at the same sort of level.

So just looking at this low there, and then we’ve got the moving average, the 50-day moving average, which comes in there. And then we’ve got this support from these previous highs coming in here.

So, look, we’ve got a cluster of supports just below the markets. Unless that breaks, really, I think it’s going to be a case of we just continue to do this for now, continue to grind higher.

Again, that’s the base case that we continue these rally inequities. So just looking around the region, Nikkei has been interesting in the last week. It’s been struggling all through here.

It’s been struggling really since February. But just in the last few weeks, we’ve seen this. So there was a support zone in the Nikkei through here.
So we had this false break, about what’s that? That’d be three weeks ago, had a false break.

Market fell beneath it, but then quickly snapped back to above support and then has rallied quickly. We can also see these moving averages they had turned down, but now they look like they’re starting to roll back up again.

This is not a bearish pattern by any stretch. This looks like a bullish consolidation we’ve had this year. The big run-up from those COVID lows. That looks like textbook consolidation and it’s stayed again, stayed again.

Yeah, look, I think there’s every chance it looks like I’ve also, like, got a bit of a trend line just through here. You could probably draw that. I like trend lines where you’ve got, like, several points on it. Like, you can draw up a two-point trend line anywhere. It doesn’t mean a lot.

Like, for example, we could draw to join that and join that and go, “Oh, look, there’s a trend line.” It’s only got two points on it. I don’t think it’s a terribly meaningful trend line when you do that.

I much prefer it when you’ve got, like, several points on it like this one. It’s broken above it. Yeah, I think, look for higher levels in the Nikkei. Also, just looking at an emerging markets, ETF, so this is a Vanguard emerging markets ETF.

Actually, I think this is probably going to be a good opportunity in this particular stock. So there are the COVID lows. Had a great run into February. Same time the Nikkei picked. Been traveling sideways.

Again, it looks very corrective and constructive in its nature. I think that at some point, we just go back and get a little bit more data on this. Let’s just quickly look around on a weekly.

And you can see, you know, the overall trend is very much up, but it does go through periods of consolidation like every market does. So, you know, we go through that, you have a big move, you get the consolidation.

We’ve had another move and now we’re getting the consolidation. I think it’s going to be a case of this market doing something like this, you know, a little bit like what we discussed in the Russell a moment ago.

There and then break. So that’d be what I’d be looking for in the emerging markets. So, you know, maybe an emerging market ETF, like this is VAE, it gives you exposure to a lot of the emerging markets company.

It’s, yeah, look, interesting opportunity. So, yeah, we’ll just watch this over the next few weeks. It’s not like the Nikkei rally at this point. This could continue to go sideways for, you know, a few months still.

I don’t know. But if we continue to see it move up towards these highs, pullback and then break, well, that’d be a really bullish sign. So, now, what I thought we’d look at today is a commodity we haven’t discussed before, and that is uranium.

Really big move last night in uranium up here. It all happened really quickly. So uranium’s are really interesting green play. A lot of focus on, you know, the likes of lithium and, you know, some of these renewables.

But uranium doesn’t get as much airplay, but it’s really interesting because uranium doesn’t produce any emissions. So virtually no emissions.

So all this talk of moving to renewables, but you still need base power load to, you know, run things when the wind’s not blowing and, you know, the sun’s not out and all that.

So uranium is one of those possibilities which would come in and take a lot of the coal out of the system because uranium has that potential to provide that baseload.

I did a interview about uranium back in as late December, and I’ll run it after this video of “Trade the Trend,” if you’re interested, if you want to know a little bit more about what the story in uranium is.

But it’s a really interesting story of not enough supply, potentially a whole lot of demand coming through and a really big bull market potentially in the making. So just to put some perspective on what the story in uranium is, just throw this up on a weekly chart.

So this is what happened last time uranium got a bit of a tailwind. It was a really big, huge bull market, then the Fukushima, and I’ll go into it in the video after this, but then go into this long bear market.

And we’ve been grinding along the bottom for several years now. And it looks like we’ve got this big rounding base formation in place in uranium.

So that move we saw a moment ago on the daily chart looks huge, but then you put it in the perspective of the weekly, and, you know, we’re still really low in terms of where this has been.

So I think there’s an opportunity developing here. So having set the scene, one of the…This is an interesting one, this next one I want to show you. It’s an ETF. It’s solicited in the U.S., and I’ve got a holding of this company.

It’s the North Shore Global Uranium Mining ETF. So it’s got a collection of about 20 or so or more uranian companies from around the world and it’s all packaged up in this one ETF. Really good product.

Now, what I want to talk about here is that, you know, one of the hardest parts of trading is exit strategy. Exit strategy is just such a hard thing. And look, it’s something I experienced myself.

So when I’m trading my ASX share portfolio, it’s mostly algorithmic in terms of the exit levels are calculated. I know exactly when I’m getting out. I don’t need to think it through. It’s just based on what I’ve designed.

But when it comes to something like this, so I’m not trading this algorithmically, I’m using the same process, I’m using the same moving averages and breakout strategies, but I’m doing it based on what I’m seeing and what I’m interpreting.

That means I don’t have a calculated exit strategy. Using the same process of lots of room to move, of letting profits run, but then I’m calculating that exit point based on what I’m seeing develop.

It’s just so hard. It’s so hard emotionally to manage these larger pullbacks when you’re trying to stay on a larger, medium to longer-term trend. This is where I bought. It was around the time I did the interview in December.

Well, this is an interesting story in itself, which we won’t focus too much on, but you hear a lot of people saying, “Oh, look, I think I missed it. The price is too high.

I don’t want to buy up here.” But look, that’s where I bought it. It was an all-time high for this ETF. So, looking at that in an isolation, looks like…well, I think a lot of people would say, “Look, I’m going to give this one a miss. I should have bought down here.”

Often you don’t get to buy down there. It’s later on when something comes to your attention or when you have viable capital. And for me, you know, the bell rang for uranium when it was up here and I looked and the opportunity was there and I bought it.

It turns out was a pretty good entry point, you know, in hindsight when we look back. Now, all these little corrections along the way up here, and, well, look, they’re not actually that little.

These are some meaningful, you know, corrections we’re going through. I didn’t have any problem, like, sitting through these. They were okay. This one here is about 20%. You know, these ones are in their teens.

That one there being in it, you know, high teens. They were okay, no problem sitting through there. When we came back down here, it was… Let’s just go back. Let’s look at it like this because that’s what I was looking at at the time.

So, to give you an idea, it’s about a 20% pullback. So what do you do? You can see where I’m in. I’m in down here, I’ve got a good gain. The moving averages are rolling over. It’s all looking a bit soft. It looks like it’s is going to fall further.

It’s easy to say, “Look, I’ve had enough. I’m going to bank this one, I’m going to go away.” I spent a lot of time looking at weekly charts of this of one of the large uranium stocks which has a much longer history than this stock.

And I came to conclusion that the upside potential was so great that it was worth trying to ride this correction through if that’s what it turned out to be a correction.

So one of the things I did, I looked at the Fibonacci zones, the retracement, and I saw, look, it was possible we could see the market come back not far above where I got in and preferably holding above 50%, but there was that potential for a much larger fall.

And I looked at this and I thought, “Look, I think it’s worth, I think this is worth trying to stay in.” So I resisted the urge of taking, I think it’s about a 60% gain at this point. I had the currency move in my favor as well.

Market fell. I was feeling, you know, well, at this point, it was still…look, it was like, well, it’s not what you want to see. It was unpleasant, but it was all part of what I thought was possible.

Pretty much worked out that my exit point was going to be down here. I was going to let it get out ot the fib zones, and I would have gotten out with a small, maybe 10%, 15% profit.

But then we’ve got this move and this moves happened…it’s happened in the last couple of weeks. I would’ve liked to have brought this to you as a potential opportunity earlier, but it just sometimes markets run and they just take everyone by surprise.

Break below here, I would’ve thought this was going to maybe go sideways and then have another move down. But it has reversed like you do sometimes see in commodity markets, but they’re just so hard to catch.

So, you know, that’s why I haven’t been able to bring this as an earlier opportunity, but it just goes to show that it reinforces a need that if you want to stay on big moves, you’ve got to give them room to move.

And giving them room to move is more than 10% or 20%. So if you approached the market like this with a 10% exit stop, well, you wouldn’t have got here in the first place because, look, 10% is there.

Yeah, you’d never get through any of those pullbacks. Take it back to 20% and there’s about 20% there. You’d get through some of those earlier ones, but this one here will then take you out.

So this one got down to around 30%. So it just shows how far you’ve got to give these big trends room to move. I was prepared to give this one a touch over 40%. I was going to give it to about there.

Who knows? Like, you know, this isn’t a done deal by any stretch now, but I’m still well and truly in the game. The price is up, it’s nearing your all-time high and I’m still on the game. I didn’t get bucked off during that correction.

And they’re hard emotionally to sit through, particularly when you don’t have a calculated exit level and you’re just doing it based on analyzing what you’re seeing and trying to work out where the correct points are.

So, having done that, I want to just go through some of the uranium stocks who have set the scene for uranium. I think there’s a good play there. It’s like working out what to do with it all.

So here’s the largest listed uranium play in the world of stock called Cameco. It’s a Canadian company. So, again, let’s get some perspective. I want to look at the weekly first.

So this shows you why I really wanted to try and stay in this uranium play. Well, look at the last boom. Cameco went from, say, $1.50 to $55. And uranium’s actually a really small market.

You compare it to something like the gold industry and this is tiny, it’s minuscule. So if you get a weight of money coming into it, you can really push the price, you know, as we saw case in point.

There we’ve had this massive bear market, and this is one of the stocks I was looking at when I was trying to work out what to do.

You see, like, I caught a good part of that move in the ETF which I’m in, but that’s not what I’m after. I’m not after that. I’m after this. You know, I think this has got the potential to be doing that when you look at it on the weekly chart.

So, you know, if you’ve got to get that, if you are going to have a chance of getting that, you’ve got to be able to sit through and work through, you know, these consolidations when they happen.

So Cameco is one of those ones which could provide, you know, a really good opportunity as well. It’s run…in the scheme of it, we’re only back to where it was a few months ago.

So it’s just working out where is the entry point. It’s one which I’m going to be watching closely. If we see something like this develop over the next few weeks, you could then get that move up there. Just got to move this out of it.

So, yeah, look, if we can see a little bit more of a move, then a bit of a consolidation, then maybe we get a leg up., that could be a potential entry point in a stock like that. It’s another way this could be played.

This is an interesting one. It’s called Yellow Cake. It’s U.K. listed. It tracks uranium price itself. It’s not as volatile as the stocks, but it’s interesting because it’s been in this consolidation and it now looks like it’s starting to break up out of it.

So if you can trade U.K. stocks, Yellow Cake is YCA. That’s an interesting play. Locally, we don’t have a great deal of locally listed, Australian listed uranium stocks, which is, you know, a bit funny because we have one of the largest uranium deposits in the world.

Resources in the world is in Australia, but it’s illegal mining, can’t mine it in Northern Territory or Queensland where a lot of the deposits are.
So it’s actually you can in Northern Territory, you can’t in WA.

So the industry isn’t as it is particularly in Canada, but locally, we have a stock called Deep Yellow, DYL. A bit of a frustrating story. My algorithms picked it up here, back in November, got a really good run out of it.

Again, giving it a lot of room to move, wide trailing stops. Hit the exit stop here just a couple of weeks ago. So this is a thing with your exit strategy.

You’ve got to give stuff room to move, but you’ve got to have a point, you’ve got to have a line on the sand where you say, “Okay, it’s gone far enough. I’ve got to cut.” And with the volatility dropping off in this period here, the trailing stop went from here, just at a ratchet higher.

So I just clipped it in this last little sell-off, but hey, look, that happens. This is one of the good locally listed ones, I think, which is worth keeping an eye on.
The other locally listed stock is Paladin.

Again, got an entry signal for Paladin here and still in this one. Not my own portfolio, but in my Motion Traders, you know, hypothetical portfolio for the members in their trailing stop has been down here.

So it rode that through. Didn’t catch it through here because back here it was a 15-cent stock in there. I have filters for volatility, and it’s really hard for these little, you know, these low price ones to trigger entry points because of the way I feel the volatility.

But look, this is a harder one to get into. Now, there’s not much asymmetry in this at the moment. So, look, you get in here, where do you put your exit point? What are you looking for?

It’s one of tougher plays, I think, to try and get in if you’re not already in. But look, if you are interested in this space, make sure you stay back and you watch the video that’s going to be following afterward.

Otherwise, look, most of the plays are in the U.S. So, you know, you’ve got things like Denison Mines which has started to move up, Energy Fuels, NextGen Energy, harder ones to play.

If you want to play these ones, I think the best play is that North Shore Global Uranium Fund, which is URNM. Otherwise, you know, you’ve got the local ones, but, you know, concentrating into just one stock.

So, you know, generally, I prefer an ETF to trade this sort of uranium space. So, look, I think that’s a wrap for this week. We’ll leave it there.

If you liked it, if you got something useful, please hit that Like button that tells YouTube the videos are worthwhile being shared around and other people watch them and I keep making them.

And I’ll run that uranium video for you after this. So, hey, thanks for joining in. Find some good trends in the week ahead, and I’ll be back next week with another installment. Until then, thank you.

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