Merv's Weekly Commentary, 09 Mar 2008

Merv’s Weekly Uranium Review
for week ending 07 Mar 2008

Although the Daily Index seems to have topped out, the Friday action seems to be saying “Hey, not so fast”. The closing price for the Index was in the upper part of the daily trading range suggesting that the Index still wants to move to higher ground but the pressure is still to the down side.

Starting with the Daily closing numbers the Merv’s Daily Uranium Index closed lower by 0.076 points or 2.22%. There were only 9 winners at the close and 36 losers. Five stocks closed unchanged. As for the daily action of the top five stocks based upon market value, Cameco closed lower by 3.1%, Denison closed lower by 2.3%, First Uranium closed higher by 0.6%, Paladin closed lower by 1.3% and Uranium One closed higher by 1.1%. The best daily performer was Hathor Exploration with a gain of 18.5% while the worst daily performer was Titan Uranium with a loss of 11.2%.

For the week, the Merv’s Weekly Uranium Index closed the week at 8406.36, down 300.94 points or 3.46%. There were 11 weekly gainers, 37 weekly losers and 2 unchanged. Of the five largest stocks Cameco lost 4.4%, Denison lost 4.9%, First Uranium gained 3.2%, Paladin lost 2.4% and Uranium One lost 13.3%. The best weekly gainer was Hathor with a gain of 87.7%, this after a 174% gain last week. Someone is making money. As for the poorest performer on the week, that was Mega Uranium with a loss of 18.8%.

Looking at the weekly chart we see that the Weekly Index is back on the move to lower territory. The lower lows and lower highs might have some significance for Elliott Wave analysts but I will stay away from that technology as I do not profess to be an expert there. We had retraced 50% of the high peak in the Index and will now have to see if such retracement will hold or if we are going to make a new low sometimes ahead. Although I am inclined towards thinking that a new low is not in the cards I go with what the market action is telling me and not try to outguess the market, or try to tell it what it should do. I will leave that to others.

Although not drawn on the weekly chart, a trend line touching the lows would give us a downward sloping wedge pattern, which is usually a positive pattern as the trend line break is usually to the up side. However, one usually expects a break-out from this pattern sometimes after the action has moved to the right about two thirds of the way towards the final apex point and that is still some distance away. But it is something to remember as the action progresses.

So, we still have the Weekly Index below its negative sloping long term moving average line and the long term momentum indicator remains in its negative zone. There is nothing here yet that would cause me to start to reverse my long term rating. It is still BEARISH.

On the intermediate term I go to the Merv’s Daily Uranium Index. The action is comfortably back inside its zone between the second and third FAN trend lines. The Index is also back solidly below its intermediate term moving average line and the line continues to slope downward. As mentioned often, for a trend reversal I place greater emphasis on the moving average line (or indicator trigger line) slope change than the crossing of the line itself. As for the momentum indicator, it continues in its negative zone below its neutral (50%) level. As for the direction of the indicator, it is back to the down side below its negative sloping trigger line. For about three weeks the indicator had been above its positive sloping trigger line, heading towards its neural line and the positive zone, but never made it. The volume indicator (not shown) is still above its intermediate term trigger line but heading lower fast. Its pattern has already given us a lower high and lower low reading so one might be okay to give the volume indicator a negative rating. All in all, I remain with a BEARISH rating for the intermediate term

On the short term everything seems to be in the bearish or negative camp. The Daily Index is below its short term moving average line and the momentum indicator continues to move deeper inside its negative zone, below its negative trigger line. I have drawn a short term downward sloping channel but at this point I would be a little cautious to place too much reliance on it. The only rating I can give the short term is a continuing BEARISH rating.

Mentioned earlier was the fact that the Daily Index closed in its upper part of the daily action. Looking at the more aggressive Stochastic Oscillator (SO) we see the oscillator line starting to converge with its trigger line. This is happening very close to the SO oversold zone. I would not be surprised if within another day or two we have a short rest period from the downside move and go into some sort of lateral trend or maybe even a rally. Should that happen it would be only a short term thing until the other indicators follow.

This is still not the time to be jumping in for speculators and investors. Both of these groups, by my definition, act on technical considerations that are in their investment of speculative direction. In my way of looking at things the REAL GAMBLER is one who acts without the technicals being in his direction OR acts on fundamental considerations without regard to price direction and then holds on for dear life hoping not to lose his shirt when the down turn comes. How many are in THAT category since the down turn hit us for the past almost a year?