Merv's Daily Commentary, 08 Apr 2008

After The Close, 08 April 2008

Another down day for the uranium stocks. One can almost start to get real discouraged. It’s sure a good thing that we all know that there will be a bottom at some point and uranium stocks will once more zoom to new heights (we all do know that, don’t we?). This trying to pick the bottom could sure get frustrating. Good thing that in the end we go with what the charts and indicators are telling us. This relieves the mind from worries as to WHY the market is not zooming and just accept what is happening. Not being a fundamentalist I have been asked in the past as to why the uranium stocks are not moving higher because as we all know there is a great need to address all those nuclear power projects being built all over the world (or is it only in China?). I hope that you go to the Uranium Links every now and then and there you will see that for whatever reason the price of uranium has been going down and, as with the Index, is at new bear market lows. That can’t help any. Let’s see what happened today.

The Merv’s Daily Uranium Index closed lower by 0.071 points or 2.52%. There were 10 winners, 35 losers and 5 going nowhere. Of the five largest stocks, Cameco lost 0.2%, Denison lost 3.3%, First Uranium gained 0.3%, Paladin lost 3.6% and Uranium One gained 1.2%. One might take comfort that they were not all losers. The best performer on the day was Quaterra with a gain of 8.1% while the worst performer was Aurora Energy with a loss of 29.6%. That loss was no help to the Index.

Still nothing much happening from the intermediate term although the momentum indicator is once more turning downward. It is in its negative zone but still just slightly above its trigger line. The trigger is still pointing upwards and has not yet been affected by the recent down days. The Index is still trading below its negative sloping moving average line. No change in the rating, it remains BEARISH.

Things happen somewhat quicker in the short term period. The Index has once more moved below its negative sloping moving average line and the momentum indicator has once more turned towards the down side. It is, however, still slightly above its positive trigger line. That “box” is becoming a stronger and stronger influence on the short term direction of the Index. We now have two peaks and two valleys inside the box. The longer the Index stays inside the box the stronger the break-out will be, whatever the direction. The short term moving average line is now going into its 6th week pointing downward. That’s a long time for the short term moving average to be sloping consistently in one direction but is not a record. It does tell us that it must be getting closer and closer for the moving average to take a break and move up for a while. However, we shall not jump the gun and assume it will do so immediately, we shall let the market handle that and just follow the market. Following the market we are back into a BEARISH rating for the short term, again.

On the immediate term or direction the Index is once more below the very short term moving average line and the line has turned downward. The Stochastic Oscillator has crossed below its trigger line but remains in its positive zone. The trigger is still pointing upward. For the immediate term rating we are back almost to the bearish but not quite. The rating is – NEUTRAL.

Some days back I mentioned that a short term trader could take his cues from the short term moving average line. Well, it’s been performing pretty well, unfortunately in the wrong direction.