CCJ (Cameco Corp)

Cameco is a miner of uranium and has a strong history of increasing profit. The stock has risen from below 10 to over 40 over the last 2 years, but has backed off since spring of 06. While profitability continues to rise, it appears that the stock has gotten a bit ahead of itself trading at 60 times past earnings. Now the expectations for 07 are $1.61 per share which puts the stock at a much more reasonable valuation but forward projections are never extremely accurate.

The stock has run into resistance and sold off sharply late last year. This sell off probably drew in some of the more aggressive short sellers and then the November and December rallies probably stopped them out and gave the bulls new hope. Now the stock is turning back and selling below the most recent consolidation on strong volume. I expect that this will begin to concern the bulls and we will see a steady liquidation for the next few months. If the overall market gets much more weakness it could add to the move making the stock trade down more quickly.

At any rate, I am shorting 9,000 shares or taking a 3% position. I got the stock sold at 37.27 and will use my standard 10% stop level for the time being.