Merv's Weekly Commentary, 16 Mar 2008

Merv’s Weekly Uranium Review
for week ending 14 Mar 2008

Gee, it looked like it was ending up to be a good week but Friday was a disappointment, in fact for want of a better word, a bummer. The Merv’s Daily Uranium Index closed down 0.106 points or 3.31% on the day. The winners and losers looked even worse with only 8 winners and 36 losers. Six stocks remained unchanged on the day. None of the largest five stocks closed on the up side. Cameco closed lower by 1.0%, Denison closed lower by 2.5%, First Uranium closed unchanged, Paladin closed lower by 5.4% and Uranium One closed lower by 2.0%. The best performer, if you can call it that, was Uranerz Energy with only a 5.4% gain. For the best of the day the % was very low. Of course it’s better to be on the plus side than on the minus, such as the worst performer Mega Uranium with an 11.7% loss.

As for the week as a whole, that wasn’t too great either. The Merv’s Weekly Uranium Index closed the week down 465.87 points or 5.54% at 7940.49. There were 9 winners and 39 losers with 2 that went nowhere. The five largest stocks were mixed with Cameco gaining 5.7%, Denison gaining 1.5%, First Uranium losing 2.0%, Paladin losing 5.0% and Uranium One gaining 9,1%. The best weekly gainer was Energy Fuels with a gain of 16.3% while the worst loser was Xemplar Energy with a loss of 26.1%.

As you can guess, with a down week the long term bearish trend continues. The Index continues trading below its negatively sloping moving average line while the long term momentum remains in its negative zone. The long term Index shows a very large downward sloping (bullish) wedge pattern which, if odds are to be believed, will eventually break on the up side. The size of the pattern is, however large and it may take more time to reverse the Index trend. Grasping on to any thread of hope, the long term momentum indicator appears to be showing a slight but steady improvement in the strength of recent Index action. Who knows, it may not be much longer before a real turn around. With 64% of the Index component stocks in bearish territory and the indicators as they are, for now the long term rating remains BEARISH.

On the intermediate term things are not yet looking up. The Index continues trading below its negative moving average line and the gap is getting bigger again. The momentum indicator remains in its negative zone and below its negative sloping trigger line. With 54% of the component stocks in bearish territory and only 28% in bullish territory, without prolonging the agony, the intermediate term rating remains BEARISH.

The short term always provides the most interesting action. Back in the late 1950’s there was a professional dancer who made a lot of money in the stock market and then wrote a book about how he did it. The book “How I Made $2,000,000 in the Stock Market” came out in 1960. It caused quite a stir in its day. I don’t remember if he made more money with the book or in the market. His simple method was to wait until a stock was “boxed” in and then invest when the action moved out of the box. We have a little “box” in the Daily Index. The next short term direction of the Index should be when the Index closes above the upper or lower levels of the box. These days we don’t really call it a box anymore but a lateral channel, it just sounds more elegant. The box is very small so any break-out is not expected to forecast a major move, just a short spurt. The subsequent action will tell us what’s what.

The Index touched the short term moving average line on Friday but ended on the down side. The moving average line continues to slope downward. The momentum indicator remains in its negative zone and has turned downward below its negative trigger line. Of interest, the more aggressive Stochastic Oscillator (SO) has not turned down. It continues to head higher above its positive sloping trigger line but unfortunately still below its neutral line in the negative zone. The weekly table shows that the component stocks bullish percentage stands at only 26% while the bearish percentage is at 53%. Putting it all together, the short term remains BEARISH but with some interesting reversal possibilities.

Boy, this relaxing and having a beer is dragging on but no use to rush in just because it’s taking time. The investor and/or speculator would continue to sit back and continue relaxing but the gambler can always find something to gamble on.