Denison Mines Corp. (T-DML) is the last of the five largest uranium stocks to go through a review here over the past few days. Although my data only goes back to 1997 if my memory hasn’t gone totally screwy I seem to remember a Denison Mines way back in the 1959’s that discovered a rich uranium deposit. I’m sure that THAT mine has gone through some reorganizations over the years and DML is the latest result.
What we see here is a stock that has been in decline for a few years, losing over 90% of its value, before bottoming and going through several years of base building activity. The stock took off in mid-2003 from around the $0.50 mark and had a good two year run to the $7/$8 level before taking a rest. A new thrust took past a year later for another 100% gain. A serious negative divergence took place warning of a potential reversal ahead, which we are in right now. With the price below its very long term negative moving average and the momentum indicator pointing lower in its negative zone the long term (and very long term) rating is BEARISH.
Looking at the daily chart we see that the intermediate term momentum indicator had been getting weaker and weaker prior to the topping out of the price. A double top pattern was another negative. Everything turned negative in late June at around the $13 mark and except for one attempt at a reversal, the price has been in a downward direction since. From an intermediate term point of view there is nothing in the chart that is yet encouraging. The price has recently made a new low confirmed by new lows in the momentum and volume indicators. For the intermediate term the rating is also BEARISH.
Short term things are not quite as clear. The price action is very similar to that of the Merv’s Daily Uranium Index. The past few weeks has seen a lateral move with the short term moving average line turning to the up side and the price closing above the line. The short term momentum indicator is in an uptrend, above its trigger line but still just below its neutral line. We have a down trend line from the late Oct-early Nov top that has been broken on Thursday. Despite a decline in the price on Friday the price is still above this down trend line. Finally, we have a trading “gap” in the price in mid-Jan that should be filled by a further advance in price. Although the past few weeks show a lateral price trend the indicators suggest that the rating for the short term should be BULLISH, at least until reversed.
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