Gold and Oil Stocks

It’s 3:05am New York time and Oil is scaling back to $60 per barrel

This is pretty much in line with my short term energy market outlook as detailed in my previous post

Here is a comment on Uranium from an old respected market analyst:-

“It’s mind-boggling. We’re in a uranium shortage so huge that half the world’s 441 nuclear power plants might go dark. Yet 80 new plants are in construction or planning—mostly in Asia - Jim Dines”

After a short term spike in prices it seems that Uranium stocks corrected along with the rest of the energy complex.

Therefore now might be a good time to begin building a core position in this area.

Fundamentals:

Deep Yellow Limited is a Uranium explorer in Australia’s Northern Territory.

The stock was severely oversold on disagreements about rock sample Uranium content between the company and the analyzing laboratory.

Although I don’t deny there are some issues, I believe the panic selling was overdone.

This is further reinforced by the recent massive insider buying - See Change of Director’s Interest Notice from 11/30/05 to 12/2/05

Technical:

DYL recently hit resistance at its rising trendline (in blue) and relative strength index (RSI) looks to be turning upwards.

There is also a gap between about 9c and 11c which should be filled in time.

I am buying a position at these levels with a stop loss order at 7.2c (25% below purchase price)

I will take profits by selling half of my holdings when the price reaches its 50 day moving average (approximately 14.5c).

Deep Yellow Uranium Exploration

Money Management

This is a small cap stock with explosive potential and risk. Therefore limit exposure to 2% of your portfolio.