Buy Nuclear Exchange-Traded Fund to Ride Uranium Rally

Source:

The easiest and most conservative way to invest in the sector is to own Market Vectors Nuclear Energy exchange-traded fund. The ETF tracks a capitalization weighted global nuclear energy index consisting of 35 stocks. Sector breakdown by weight is uranium mining (42%), plant infrastructure (26%), nuclear power generation (24%), uranium storage (5%) and other (5%).

...Uranium prices have been on a roller-coaster ride during the past two years. The price of uranium oxide advanced sharply from US$40 per pound at the beginning of 2006 to a record high of US$138 in February, 2007, on news that initial production from Cameco's Cigar Lake mine had been delayed from 2008 to at least 2011.

Cameco is the largest producer of uranium oxide in the world, with about 20% of the world's production. The Cigar Lake mine was expected to provide a major addition to world production. Other producers, such as Uranium One(UUU/TSX), also announced reduced production and reserves...

The reductions come at a time when demand is growing. The number of nuclear reactors in the world is increasing rapidly (most notably in China, India and Europe)...

Participation Corp. (U/TSX), and the Market Vectors Nuclear Energy exchangetraded fund (NLR/AMEX) recently completed short-term base building patterns and established intermediate uptrends.

Their short-term momentum indicators (Moving Average Convergence Divergence, Relative Strength Index, Stochastics) have improved from oversold levels.

The easiest and most conservative way to invest in the sector is to own Market Vectors Nuclear Energy exchange-traded fund. The ETF tracks a capitalization weighted global nuclear energy index consisting of 35 stocks. Sector breakdown by weight is uranium mining (42%), plant infrastructure (26%), nuclear power generation (24%), uranium storage (5%) and other (5%). Cameco is the second-largest holding in the portfolio with a weight of 9%. - Don Vialoux, chartered market technician, is the author of a free daily report on equity markets, sectors, commodities, equities and exchangetraded funds. Reports are available at www.timingthemarket.ca. Mr. Vialoux does not own nuclear energy exchange-traded funds or other uranium stocks mentioned in this report.

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