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« Australian PM: We Cannot Ignore Nuclear Power | Main | Uranium Spot Price Slips Again: $129/lb »
Monday
Jul162007

Khan Resources: Consolidating and Preparing for Another Rally

We signalled a BUY on Khan Resources to our readers on 5th March at $3.63 so we are currently sitting on profits on around 15% in three months.

Khan Resources: Consolidating and Preparing for Another Rally

However, volatility is decreasing in this stock and it appears to be consolidating after its significant 34% correction. When volatility is decreasing, it usually signals that a stock is preparing to resume its trend and in the case of Khan Resources, that means we are due another large rally in the stock price.

Looking at the chart above, we can see that when Khan went on its run to $5.64, the Bollinger Bands were drastically far away from each other as the stock was behaving very erratically. It is worth noting that just before Khan's explosion to $5.64, the Bollinger Bands were moving much closer together and KRI was consolidating around the middle Bollinger Band. Today, the technical indicators are in a very similar state to that of late March of this year. The Bollinger Bands are moving much closer together and Khan has again been consolidating around the middle of its Bollinger Band. Khan Resources looks as if its going to go on another run as it did during early April. We are not sure whether it will be as steep or as brief the April run, but it will probably go on for longer, at a slightly lower gradient but over time will show a larger percentage gain.

Many of the uranium stocks we follow have been consolidating over recent weeks and this suggests to us that we are on the brink of another leg up of this Uranium Bull Market that is far from over, despite recent declines in the spot price of U3O8.

Recently we saw Laramide Consolidating, Mega Uranium Finding a Support and Strathmore Minerals Finding a Bottom. Indeed some uranium stocks have put on great gains in recent trading sessions, with Laramide putting on nearly 9% on Friday and Aurora gaining 8%.

If you have uranium stocks, hold on to them. If you haven't now is the time to take advantage of these discounted stocks, in our humble opinion.

Khan Resources is a BUY in our Uranium Stocks Portfolio and it trades as KRI on the TSX.

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