Shorts Betting Against Uranium Plays

Originally published In the News 7/17/07

Uranium bulls, including Fast Money’s Eric Bolling, have ridden the commodity to big trading profits over the last few years. But all good things come to an end. The recent correction in the group might prove to be more than the pause that refreshes.

An unprecedented number of short sellers are attempting to exploit the uranium mania that prompted more than 12 mining companies to quintuple their share prices during the past four years.

Demand from utilities to fuel nuclear reactors has plunged 72 percent from an April 6 peak, according to TradeTech LLC, which has tracked uranium prices since 1968. In the second week of July, 3.4 million pounds of the metal was available, more than three times the amount purchased by power companies. Bloomberg

The bears seem as cocksure of themselves here as the bulls did six months ago. Price cures a lot of excesses, and in this case supply seems to be enough to sate demand. Bolling posited On Fast Money recently that that Cameco (CCJ-NYSE) should hold near the $42 level, approximately the 200-day moving average.  For now, that number seems to be the line in the sand. No Position

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