Up Another 1% – BAS Is A Champion

Just as I was beginning to lose faith, the rally is back and more tender and loving than ever.

Oh, sure the indices are all flat. But if you concur with that metric, that just means you aren’t owning the right stuff.

Below the surface, select stocks are valiantly striding to attain total victory. They are being welcomed home by stock brokers, to the sounds of silver trumpets and streamers playfully riding alongside them in the air’s currents.

BAS is chief among these stocks. The hedge fund guys have stumbled across my little gem, and are now insatiably attempting to claim my honor for their own. Such folly, but a necessary inconvenience to making thirty-percent-plus gains this year.

BAS is screaming higher. And with higher gas and oil prices, the American energy revolution is back in play.

Dollar up, oil up, treasury yields up, stocks slightly off, PM’s flat – sure, why try and make it consistent. It’s a non-linear world we live in folks. Get used to it.

Your market correlation models are getting blown to pieces this morning, as the movements reset. Really, yields can’t correlate with markets forever; sooner or later the transient correlations lead risk exposure by the halter to unsustainable levels. Blow ups follow.

I see no reason why markets can’t selloff even though yields are pushing up. With treasuries so inflated, they will be prone to massive directional moves that might belie the rules of thumb of “teeter-totter” purchasing patterns. I mistrust those who say otherwise.

Interference in markets from the huge players has primed the classical views of markets for disconnection. Especially at the turning ranges, things are prone to get very weird.

Personally, I’m not ready to completely abandon the market rally just yet. We haven’t confirmed the move in any direction. But I have raised a cash stake, which I will guard jealously. And when the rally is finished, I all but guarantee anyone trying to use a purely correlary approach to defining the turn will be left for dead.

The sun is shining through the blinds of the room. A lingering smell of water from the glasses on the table disrupts the dryness. The weather is almost warm after the bout of cold.

In a moment the day will be done and the room will be vacated. Dinner will be set on a table somewhere, but footsteps will take me away from there, to a meeting elsewhere.

The last few days have carried themselves at a marked pace. Work is strenuous and demanding – the nights are just barely better.

Last night I was at a quarterly meeting that dragged on for almost four hours. Tonight’s will be at least two hours long; maybe it will push three.

At least things are getting accomplished. I abhor meetings mostly. There is a breed of man in this world that loves meetings. They relish in them. It is these men that can transform a simple and straightforward task into a five hour ordeal. And somehow, at the end of it all, nothing gets done.

Doing business with the wrong people can surely be one of the least recoverable mistakes there is.

Thankfully, those that I’m working with are fairly good at keeping a straight course. Now and again, a few of them like to veer off, but pressing and sour tempers of the hotter among us can drive it back on path again.

There has been little noteworthy the last few days, where stocks are concerned. I see my positions lifting – I was up .4% today – but the market itself is churning and banal. One can’t help yearning for the days of last week, where the market couldn’t help but spike 1% higher every day, without respite.

There needs to be more than simply erasing the early morning selloff each and every day. There needs to be the next big push.

Alright, so today was very nasty for me. RGR, CCJ, and BAS all cramped up, and are busy drowning in the pool. I can guess why CCJ is having trouble – their earnings sucked wind. But RGR and BAS are something of an enigma. RGR has no news pushin git, and the only thing that happened to BAS was it caught a downgrade from some analyst.

Of course, all three names are up so much in the last month it could just be some profit taking. CCJ is pushing back below those magically colored lines, which I have learned is the ultimate arbiter of reality. Ergo, it must be in serious trouble…

Anyway, throw in the price of silver with those two and this was a bad day. The first bad day I’ve had since November or October.

CCJ’s 2012 revenue attributable to shareholders plummeted 41% from last year. The 4th quarter was an absolute bloodbath, with revenue off 83%. Most of the carnage is from a massive write down the company took on a project called Kintyre. The rest is from uranium prices being cut down mercilessly.

However, you should have known this was going to be ugly, if only from the most recent sales prices of uranium-308.

Have a peak.

When prices go into free fall like that, it means one thing: no actual sales are occurring.

The end of 2012 was horrible for uranium sales. Because reactors don’t require a continuous feed of fuel, there exist periods where their operators may elect to sit back and not come to market. So really, almost nothing was done at the end of the year. This makes sense – with two major elections (Japan and the US), global uncertainty, looming recession, and no imminent need for uranium, producers were in the uncomfortable position of having no buyers. If you were a lowly player, desperate for some sales to keep the doors open, the last three months were not a good time for you.

But that’s all drawing to an end soon. Japan and the US have reaffirmed nuclear energy. Emerging markets are going full bore. Russia is done flooding the market with cheap HEU stock.

We are preparing for an epic resurgence of nuclear fuel prices.

Would you care for a second opinion?

Here’s one.

Here’s another.

And another.

I’ve been hammering on this point since the Fukushima reactor was still busy melting down. I’ve mentioned all the points myself – expectations of the ability of countries to drop nuclear power are unrealistic. One does not simply drop 30% of their grid. And with the immense competition for power sources globally, ignoring such a potent fuel is madness.

Now, slowly, all of my predictions, as laid out literally in the middle of the tsunami crisis, are playing out. Japan is backtracking. The US has confirmed they intend to move forward with construction of the first reactors built in this country is 30 years. The emerging markets are embracing nuclear to diversify their grids. Environmentalists have even begun marginalizing the anti-nuclear activists in their ranks – crushing their ability to be heard; mocking them openly.

Next up, Europe starts caving, led by Germany; which has no choice but to acknowledge that there is no way they can replace their nuclear facilities with windmills and solar panels.

And as these realizations hit, the price for nuclear fuel is going to skyrocket. With it, CCJ’s earnings will go from the worst in its history, to the very best.

Bring it, kids. I have your numbers. It’s time to pay up.

The walls of the room irradiate a faint heat absorbed from the hearth where a raging fire keeps back the winter tempest outside. Six stories below a fog is rising from the window panes. And the ground floor two beneath that is completely covered in a thick blanket of snow.

Going into the afternoon, I took the time to lighten up AEC. It had a great quarter, and taking advantage of the punch higher over the last six months, I took profits on everything I purchased when it undeservingly sold off last year. I’m back to holding my core position – which is about 10% of equity assets.

I now have core positions built in AEC, CLP, BAS and RGR. I have an equal sized hedge in EUO. All are equal to about 10% of assets. I have an oversized position in CCJ of almost 30%. Roughly 20% of my account is in cash.

This doesn’t count the silver I hold, which is about 15% of net value. Add that back in and all the position sizes drop a little bit; but not much.

I’m going to be very reserved about making purchases here. I’m rooting on the upside, but I’m keenly perceptive that this is the same old game being played. As prices offer me relief, I’ll just keep taking money off the table, a little at a time.

Winter has been very good to me so far. I’d be remiss to blow that.