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Correction...New Buying Opportunity
Friday, May 19, 2006

With the recent market pullback, many of our energy stocks have seen a dramatic drop in their share prices. The oils have been hit nearly as hard as the uraniums, however it seems that the uranium stocks have experienced more of a downfall as a result to not only being in the energy business but mining as well. All mining stocks seem to have been hard hit recently as well as energy stocks. It seems that CWPC has just today hit its last support level at about $5.90 which we see as very fortunate because its next support can be found at the $5 area. Another stock, which recently hit an all time high as most uraniums have done, is SXRuranium which we think is a screaming buy. The company, on the Toronto Stock Exchange, fell to $9.07 where it seems to have hit its last support level, but like Canwest is about $2 off of its recent highs. 

In all fairness we are not really sure what to think as to the news that two more board members were stepping down at Canwest in order for “independent” Directors to step in, but it seems strange. SXRuraniumone is most likely consolidating at these levels which should be healthy for the stock as it accumulates 'new money' as it embarks on its new journey (which we believe will be up). It seems that all of the uranium stocks have fallen to their support levels, with Cameco hitting a very strong one in the $37 area. We see this as the speculative money being chased out of investments that the risk could no longer be tolerated or “insured” through their margin.

With many of the companies that we have pointed out now below or close to even at this point, we see this as a tremendous buying opportunity. One in which we can now get into those companies that we previously did not have the opportunity to purchase at a decent price or could not afford at the time. Personally we are looking at SXR on the Toronto as our play during this pull-back but we are seriously considering a move into Canwest, as $2 to the upside (back to its old high areas) is worth more on a percentage basis than SXR moving up $2. However now is the time to diversify in the energy sector and for those of us with plenty of shares of Canwest it is probably wiser to not be greedy and invest in a new company which will shortly be producing from their new mine (SXR). We would also bless a move into (Paladin) right now even though its move to the downside has been rather kinder to its shareholders than others'. We still see value from this company because it will be producing about 6 million pounds of Uranium within 3 years and at this price we see that as very attractive.

There is an old saying which we are reminded of as we write this and that is, “Bull markets climb a wall of worry.” Well there seemed to be a lack of worry as these stocks were moving strongly to the upside, but after this correction it seems that we now have many stocks fairly valued with the potential for some quick short term profits. We also now have some “worry” in the market regarding these stocks which may keep some people on the sideline in order to buy only at higher prices. Investors are rewarded for taking risks, more so for taking calculated risks, and at this point we believe that the uraniums have found an area to settle at, consolidate, and then hopefully make a move to the upside as they had previously done for nearly 2 months. We see this morning as the perfect time to start our accumulation, and this shall only be halted after a 10-15% move upwards.

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