Merv's Weekly Commentary, 13 Apr 2008

Merv’s Weekly Uranium Review
for week ending 11 Apr 2008

Another day is finished and we’re still stuck in that “box”. How much longer will the Index stay in there? My feeling is that this week should see a movement out of the box but that’s only a feeling not a technical indicator.

You may have noticed a change in the Daily Index. I decided to give the Index a better value than 3 or 4. The daily changes were always less than 1.0 and often less than 0.1. The Index was recalculated to give it a value that is a factor of 100 times the old one. Nothing has changed, only the decimal point has been moved. The indicators and moving averages are not affected. I think that you will better associate with the new Index values than the old.

Let’s get right into the weekly review. The Merv’s Weekly Uranium Index closed up by 17.06 points or 0.24%. There were 24 weekly winners and 26 weekly losers. As for the five largest stocks, Cameco gained 5.4%, Denison gained 8.6%, First Uranium lost 7.6%, Paladin lost 8.3% and Uranium One lost 6.4%. The best weekly winner was Forsys Metals with a gain of 25.9% while the worst weekly loser was Aurora Energy with a loss of 25.8%.

As for Friday’s action the Merv’s Daily Uranium Index closed lower by 5.76 points or 2.00%. On the day there were 17 winners and 29 losers with 4 going nowhere. Cameco closed lower by 1.9%, Denison closed lower by 3.0%, First Uranium closed lower by 6.4%, Paladin closed lower by 8.7% and Uranium One closed lower by 3.5%. Freewest was the best performer on the day with a 6.2% gain while Xemplar Energy was the biggest loser on the day with a loss of 11.1%.

Every now and then in my Precious Metals commentary I take a look at the very long term view. I thought I’d do the same with the Weekly Uranium Index this week as nothing much is happening from the normal long term perspective. On the long term what I wrote last week applies equally this week.

The weekly chart shows the Index going back to my starting date and includes a 52 week simple moving average and a 52 week RSI momentum indicator. The Index is in a semi-log scale to show it in better perspective. The sharpest move with the greatest momentum was during 2003. By time the RSI could be calculated it was already at almost the 90% mark, well inside its overbought zone. From there, although the Index basically kept rising the momentum indicator was on a long slide downward. The Index finally topped out in early 2007 at a value over 140 times that at the start of 2003. It’s been down hill for both ever since. We now have the momentum indicator in its negative zone and the Index below its negative sloping very long term moving average line. From the very long term nothing is yet looking good. The rating would be BEARISH.

Going to the daily chart we see the Merv’s Daily Uranium Index still below its intermediate term negative sloping moving average line and the momentum indicator still in its negative zone. The indicator remains above its trigger line and the trigger continues to slope upwards. Nothing has yet changed as far as the intermediate term rating goes. It is still BEARISH.

As for the short term, the Index continues inside that “box” and is still below its third FAN trend line. However, it looks like this cannot last and something is expected to happen shortly. The Index remains above its short term moving average line and the line continues to slope upwards. The short term momentum indicator almost made it to its neutral line but has stopped short. It is still, however, above its positive sloping trigger line. The short term rating remains BULLISH.

As for the very short term or immediate term direction, the Index remains above its positive very short term moving average line and the line itself remains above the short term moving average line. The Stochastic Oscillator is bouncing above and below its neutral line and is now once more above the line in the positive zone and above its trigger line. Its trigger line is still sloping downward but this could change in another day of action. For today the very short term direction is back to being BULLISH.

Don’t give up hope, a new dawn will dawn (or something like that). Gamblers can always find something to gamble on but the investor and intelligent speculator waits for the market to be ripe. It’s not yet ripe but slowly getting there. There are still hurdles to go through so keep your fingers crossed for a roaring week.