Merv's Daily Commentary, 30 Oct. 2007

After the Close, 30 Oct 2007

As one might have expected the Merv’s Daily Uranium Index has reacted from that upper (resistance) trend line of the up trending channel. Nothing much surprising here. One might expect more than one down day and not having to panic. These are all normal trending events. The reaction could easily go to the lower (support) trend line and all would still be well. Of course should the Index breach the channel THEN it might be time to panic depending upon which direction the breach was in. However, I am of the mind that this will be a mild reaction with some new buying opportunities ahead.

The Index closed lower by 0.132 points or 2.62% on the day. There were 11 winners, 33 losers and 6 sitting on the sidelines. With a 3 to 1 ratio of losers to winners it was not a happy day but as mentioned, not surprising. All of the five largest stocks by market value declined on the day. Cameco lost 2.1%, Denison lost 3.2%, Paladin lost 4.1%, UEX lost 4.9% and Uranium One lost 1.7%. The best daily performer was NWT Uranium with a gain of 11.1% while the worst performer was Powertech Uranium with a loss of 11.2%.

The reaction has changed nothing versus my market assessment over the past few days. On the intermediate term all is still rosy with the Index still above its positively sloping moving average line. Momentum is still in its positive zone and both the Index and momentum indicators are still in their up trending channels. Intermediate term wise all is still well with the world, therefore the rating remains BULLISH.

Short term we have the Index above its short term positive moving average line and the momentum remains positive. The short term momentum (shown in the chart) has just dropped below its overbought line. This is a warning of potential downside action ahead but not something to panic about. The more aggressive Stochastic Oscillator has still not dropped below its overbought line and it is the more appropriate indicator for short term analysis. So, we may be in for a few days of downside action (not a certainty) but all is still A-OK. I will lower my short term rating just a notch today due to the momentum turn around, so for now the rating goes to + NEUTRAL.