MGA, Mega Uranium. You're welcome.

Long-time readers of this blog will recall the uranium mania six years ago.  In this blog we called it near-perfectly on the way up and most importantly sold out at the top in the spring of 2007 when most stocks in that sector were failing to hold their long-term uptrends.  Many mocked us then, and history has provided our winning retort.

We scored massive profits on several, but on MGA we saw a decent gain turn to a 9% loss.  We scored a 44% gain per this blog however on the stock in late 2008 to make up for it.  We repurchased it in late '08 because the setup was the same as it is now, with an established downtrend broken.  We'll illustrate that setup below.

Virtually all of the charts of uranium companies (most would be better termed "uranium" companies since we're talking about penny stocks), or at least the charts of the few that still exist, look something like the one above.  Most are long gone into oblivion. 

Believe it or not, Mega Uranium was a flagship for the mania back then - many called it a "blue chip" - and it has held up relatively very well in no small part due to its prominent supporters and to be fair its considerable holdings which may still prove valuable someday.  Maybe.  Read about the company's activities and prospects here.

Maybe not, but at the current price it's like a cheap call option with no (known) expiry.

To us it looks like this :

Memorize that 10-year chart at the top of this posting, because virtually all the "rare earth" stocks look like that too now, and most "gold" and "silver" penny stocks look the same or soon will as will many of the majors in that space.  Same as tech stocks, even most of the "blue chip" ones from circa 2000. 

It's not different this time.

That said, will the same thing happen this time as happened in late 2008 and late 2011 when the share price of Mega rocketed higher after breaking a downtrend? Maybe. Maybe not. Will you eventually make a killing if you make a habit of buying very rare setups like this with prudent position sizes and stops? Yes, you will, which is why we added the cheeky "you're welcome" to the title of this entry.

In any case circa $0.20 is not a bad price to pay for Mega, so we'll go long with a stop on any close below $0.17

Why $0.17? In 2004 the low was $0.175 and in 2007 the low was again $0.175 In 2012 the low was $0.175 in May and $0.175 again in June.  If it closes below that level - we'll say $0.17 to give a bit of leeway - we want no part of it as then there's a very high percentage chance it'll go to $0.07 or even $0.00    We'd rather step aside below $0.17 and reassess it later if warranted.




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