Image Source: Pixabay

At this point, it’s becoming routine: President Donald Trump issues a high-level warning that threatens to cause severe economic damage. Once the market responds in volatile fashion, Trump walks back the earlier sentiments and the market roars back to life. It’s the return of the TACO trade, plain and simple. And for Energy Fuels (UUUU), the executive signal was all that the bulls needed.

During the early afternoon session on Monday, UUUU stock found itself up above 20%. In the trailing five sessions, the equity gained roughly 41%, bringing its year-to-date performance to a blistering 377%.

Heading into the weekend, President Trump warned that he might raise tariffs on China, thus escalating trade tensions with the world’s second-largest economy. However, on Sunday, he assuaged such fears, noting that relations “will all be fine.”

Subsequently, the apparent thaw in tensions helped investors recenter the narrative on compelling growth prospects; namely, feeding the generative AI machinery. That would involve ample rare earth minerals and uranium, commodities which Energy Fuels specializes in.

Still, with so much enthusiasm baked into the UUUU stock price, the fear of holding the bag casts a dark cloud. Despite the dangers, the bullish argument may still hold water.

Ironically, confidence in the upside narrative centers on Energy Fuels’ high short interest. Right now, the metric stands at 13.54% of the float. While this would ordinarily be considered risky for long-side stakeholders, an unexpectedly sustained surge could cause the bears to panic, resulting in a positive feedback loop that sends UUUU stock higher.

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What’s more, the correlation coefficient between UUUU and its short interest is -36.75%, which indicates a weak inverse relationship. However, with the stock continuing to seemingly defy gravity, the bears may ramp up their short exposure back to prior highs.

If at that point UUUU stock manages to still march higher, the ensuing panic could be quite intense. Therefore, Energy Fuels might still have some legs remaining.

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