Merv's Daily Commentary, 06 May 2008

After The Close, 06 May 2008

Merv’s Daily Uranium Index
Market Data

Open: 264.78
Hugh: 278.00
Low: 260.21
Close: 275.08
Volume: 4915

Note that the volume is an average volume of round lot sales for the 50 component stocks. For total volume, multiply by 5000.

This might be what we have been waiting for. The Index moved aggressively higher with its best upside move in over two months. It also breached that third FAN trend line with greater gusto than the previous breach, in late February. All things seem to point to a new positive move at its beginning. However, let’s check the charts and indicators for confirmation of such move.

First the data. The Merv’s Daily Uranium Index closed on the up side by 10.47 points or 3.96%. There were 24 winners, 21 losers and 5 unchanged. With such a sharp upside move I would have expected more winners and less losers than we got. At this time one must suspect that the move was propelled by a limited number of stocks with good % moves while the down side stocks were barely moving. This is, in fact, what we got. More below. As for the largest five stocks, only one was on the down side. Cameco gained 5.5%, Denison gained 3.4%, First Uranium gained 5.3%, Paladin gained 3.5% while Uranium One was the only loser with a loss of 0.7%. The best daily performer was Yellowcake Mining with a gain of 16.3% while the worst performer was Titan Uranium with a loss of 6.6%. There were 6 stocks with gain percentages larger than the loss percentage (neglecting the minus sign). This suggests that although the winners and losers were very close to each other, the winners had by far more large movers.

On the intermediate term nothing has yet changed in the ratings although we are getting signs of movement in the right direction. The Index closed below its negative sloping moving average line. However, the momentum indicator has moved up sharply and is now above its positive sloping trigger line. It is, however, still in its negative zone and a little more upside is still required to get it into the positive. For now the intermediate term rating is still BEARISH.

On the short term, this is where things are starting to happen. The Index closed above its short term moving average line and the line has turned to the up side. The momentum indicator is moving sharply higher, above its positive trigger line but is still just below its neutral line. It is now above its previous tops from the past several weeks of lateral Index activity. The volume indicator has crossed above its trigger line and the line has turned up. As mentioned above, the Index has also crossed its third FAN trend line with vigor. All this gives us a short term rating that is now BULLISH.

On the immediate term or very short term the Index is above its very short term positive moving average line. The Stochastic Oscillator has moved aggressively into its positive zone, above its positive trigger line and above all of its previous tops from the past several weeks of lateral Index activity. The short term momentum and Stochastic Oscillator are telling us that the move of the past few days has more power or strength behind it than one might perceive from the Index action itself. The very short term or immediate direction is considered as BULLISH.

This is a good example of the shortest term moving first and then followed by the next longer term, etc. The very short term showed its strength yesterday, although the rating did not quite make it to the bullish level, it ended one level below the bull. We can now look forward to the intermediate term coming into the game.