Merv's Daily Commentary, 31 Oct. 2007

After the Close, 31 Oct 2007

Well, despite the drop in Uranium One and the king of uranium (Cameco) the Merv’s Daily Uranium Index closed the day slightly on the up side. The Index added 0.061 points or 1.24% at the close. There were almost three times the winners than losers with 33 stocks advancing, 12 stocks declining and 5 going nowhere. With such a lop-sided ratio of advancing stocks to declining stocks one might have expected a better Index performance but the two biggies held down the average. Without those two decliners the Index would have gained more than twice what it actually did. Of the largest five stocks by market value, Cameco declined 3.4%, Denison gained 3.0%, Paladin gained 7.8%, UEX gained 1.2% and Uranium One lost 17.6%. The best performer on the day was Universal Uranium with a 15.4% gain while the worst performer was, surprise, Uranium One with that 17.6% loss.

From the intermediate term stand point all still looks well. Shown today is an intermediate term P&F chart. Since bottoming out in Aug the action has continually shown a higher high and higher low pattern. It’s a long way yet from breaking that pattern. The normal chart shows the Index action continuing above its intermediate term moving average line and the line continues to point upward. Momentum is still in its positive zone but not going anywhere fast. I would like to see more space between the indicator and its neutral line (see yesterday’s chart). Volume is looking good but today’s volume is deceitful. The cumulative volume of the volume indicator has today’s volume as additive to the previous total because the Index closed on the up side thus giving the indicator a real boost upwards. However over 70% of the total daily volume was from two stocks, both of which closed on the negative side. The remainder of the volume was split between the other advancing and declining stocks. Probably no more than 20% of the total volume was really on the up side. However, putting this one quirk aside the Index is still not yet in any danger so I continue to rate the intermediate term as BULLISH.

On the short term today’s action left something to be desired despite the up day. The daily high was not able to exceed the high from the past few days so the Index still has some proving to do before I get all enthusiastic. Unfortunately, the last few days of activity looks more and more like a short term topping activity. As mentioned yesterday, the Index has room to drop and still not cause a panic. It is still well within that up trending channel so any short term down side should stay trapped within the channel. I am down grading the rating one more notch today, to NEUTRAL.