After The Close, 29 April 2008
Merv’s Daily Uranium Index
Market Data
Open: 269.40
Hugh: 271.54
Low: 254.67
Close: 259.24
Volume: 5496
Note that the volume is an average volume of round lot sales for the 50 component stocks. For total volume, multiply by 5000.
Back in 1960 Nicolas Darvas (a ballet dancer by profession if I recall correctly) wrote a very popular book, “How I Made $2,000,000 in the Stock Market”. Simply put he looked for situations where the price action was in a “box” and jumped in when the action moved out of the box. It’s been 40 years since I last read the book but I don’t recall that he played the down side. For one thing there was not the options market that there is today so buying puts was almost out of the question and shorting stock was seen as very unpatriotic. I suspect that he really made more money from the book than in the market.
So, now that the Index is “out of the box” what could one do to take advantage of the break? I would be inclined to buy put options on a couple of the larger stocks and place a mental stop when the short term goes negative for the stock. Just keeping an eye on the short term moving average line might be sufficient.
I guess I’ve been asking for it. Remaining in the “box” for so long was getting boring. Well here it is, out of the box but unfortunately on the down side. After a lateral move for several weeks the negative sentiment has been building and one should expect the move to go for some distance. A P&F chart suggests this “box” period projects a move to the 165 level. At the present time there is still that long standing projection to 190. So, it looks like 190 might still come to past even though at the time of its first projection it looked so far away.
The Merv’s Daily Uranium Index closed down 9.73 points or 3.62%. This is the worst day in a month. There were only 7 winners on the day, 38 losers and 5 unchanged. Of the five largest stocks Cameco lost 4.3%, Denison lost 2.1%, First Uranium gained, yes that’s gained 0.3%, Paladin lost 5.9% and Uranium One lost 4.9%. The best daily winner was East Asia Minerals with a gain of 8.0% while the worst loser was Khan with a loss of 9.9%. It’s somewhat a surprise that even though the day was a real loser of a day the best that the losing stocks could do is just under a double digit loss.
The intermediate term continues to trend negatively. The one little positive indicator is the fact that the intermediate term momentum indicator has not confirmed the Index drop into new lows. It remains above its previous lows although all this means is that the strength of this move into new lows is not quite as negative as the negative strength during the move to the previous lows. Still, the strength remains quite negative. The volume indicator is also still above its previous lows. This is not important once one realizes that the normal trading activity of the masses is to buy but not necessarily sell so the volume indicator is normally skewed towards the up side. The intermediate term rating remains BEARISH.
On the short term the action today has opened up the gap between the Index and its short term moving average. The moving average line continues to increase its negative slope. The short term momentum has entered its oversold zone. Now the question is how long it will stay there before it reverses and move above the oversold line for a reversal indication. For now the short term remains BEARISH.
Although the more aggressive momentum indicator the Stochastic Oscillator has not yet moved into its oversold zone. It is moving lower and is just a hair above the line. The immediate term direction is still pointing in the downward direction and the rating remains BEARISH.
Merv’s Daily Uranium Index
Market Data
Open: 269.40
Hugh: 271.54
Low: 254.67
Close: 259.24
Volume: 5496
Note that the volume is an average volume of round lot sales for the 50 component stocks. For total volume, multiply by 5000.
Back in 1960 Nicolas Darvas (a ballet dancer by profession if I recall correctly) wrote a very popular book, “How I Made $2,000,000 in the Stock Market”. Simply put he looked for situations where the price action was in a “box” and jumped in when the action moved out of the box. It’s been 40 years since I last read the book but I don’t recall that he played the down side. For one thing there was not the options market that there is today so buying puts was almost out of the question and shorting stock was seen as very unpatriotic. I suspect that he really made more money from the book than in the market.
So, now that the Index is “out of the box” what could one do to take advantage of the break? I would be inclined to buy put options on a couple of the larger stocks and place a mental stop when the short term goes negative for the stock. Just keeping an eye on the short term moving average line might be sufficient.
I guess I’ve been asking for it. Remaining in the “box” for so long was getting boring. Well here it is, out of the box but unfortunately on the down side. After a lateral move for several weeks the negative sentiment has been building and one should expect the move to go for some distance. A P&F chart suggests this “box” period projects a move to the 165 level. At the present time there is still that long standing projection to 190. So, it looks like 190 might still come to past even though at the time of its first projection it looked so far away.
The Merv’s Daily Uranium Index closed down 9.73 points or 3.62%. This is the worst day in a month. There were only 7 winners on the day, 38 losers and 5 unchanged. Of the five largest stocks Cameco lost 4.3%, Denison lost 2.1%, First Uranium gained, yes that’s gained 0.3%, Paladin lost 5.9% and Uranium One lost 4.9%. The best daily winner was East Asia Minerals with a gain of 8.0% while the worst loser was Khan with a loss of 9.9%. It’s somewhat a surprise that even though the day was a real loser of a day the best that the losing stocks could do is just under a double digit loss.
The intermediate term continues to trend negatively. The one little positive indicator is the fact that the intermediate term momentum indicator has not confirmed the Index drop into new lows. It remains above its previous lows although all this means is that the strength of this move into new lows is not quite as negative as the negative strength during the move to the previous lows. Still, the strength remains quite negative. The volume indicator is also still above its previous lows. This is not important once one realizes that the normal trading activity of the masses is to buy but not necessarily sell so the volume indicator is normally skewed towards the up side. The intermediate term rating remains BEARISH.
On the short term the action today has opened up the gap between the Index and its short term moving average. The moving average line continues to increase its negative slope. The short term momentum has entered its oversold zone. Now the question is how long it will stay there before it reverses and move above the oversold line for a reversal indication. For now the short term remains BEARISH.
Although the more aggressive momentum indicator the Stochastic Oscillator has not yet moved into its oversold zone. It is moving lower and is just a hair above the line. The immediate term direction is still pointing in the downward direction and the rating remains BEARISH.
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