Merv's Weekly Commentary, 18 May 2008

Merv’s Weekly Uranium Review
for week ending 16 May 2008

Friday’s Daily data

Open: 290.28
High: 296.65
Low: 283.80
Close: 293.38
Volume: 5450

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

Friday closed on a bright note but the week as a whole was down just a little. On the weekly chart we are seeing a bounce in the making, from the lower wedge trend line. One might imagine a move back to the upper trend line and beyond but at this point that would be getting carried away with imagination. Nothing in the weekly chart tells us we are ready for a long term reversal of trend. The daily chart and shorter trends are another thing and I’ll get into that later.

The Merv’s Daily Uranium Index closed on Friday with a daily gain of 7.25 points or 2.53%. There were 32 winners, 12 losers and 6 unchanged on the day. As for the five largest stocks by market value, they all closed on the up side. Cameco gained 4.0%, Denison gained 8.9%, First Uranium gained 0.9%, Paladin gained 6.1% and Uranium One gained 0.9%. The best gainer of the day was NWT Uranium with a gain of 17.0% while the worst loser was Mawson with a loss of 8.2%.

On the week, the Merv’s Weekly Uranium Index closed lower by 11.253 points or 0.16%. There were 21 weekly winners, 29 weekly losers and none unchanged. The five largest stocks were mixed in their weekly performance. Cameco gained 3.0% on the week, Denison gained 3.8%, First Uranium lost 3.3%, Paladin gained 8.1% and Uranium One lost 0.4%. The best weekly performer was Western Prospector Group with a gain of 24.0% while the worst weekly performer was Uranium Resources with a loss of 29.1%.

On the weekly chart we see that the Index is still far from its long term moving average line and the line continues to slope downward. The momentum indicator is also in its negative zone. On a daily chart we see that the momentum is starting to firm up and is above its positive trigger line but it has a long way to go to get through that neutral line. On the long term the rating remains BEARISH.

On the daily chart we see that the Index has once more moved above its intermediate term moving average line but the line is still slightly sloping downwards. The momentum continues to improve after giving us a slight positive divergence at the late April low. The momentum is above last week’s high level and now some distance above its level during the “box” period (which we are still in as far as the Index is concerned). The volume indicator also continues to move higher, above its positive trigger line, although it has not quite yet breached last week’s highs. All in all, the intermediate term rating has once more been upgraded to + NEUTRAL, one level below a full bull.

It would take only one more good upside action and we would be out of that box. In the mean time the Index continues above its positive short term moving average line with the line slope remaining positive. The short term momentum indicator, which just a couple of days ago was ready to go negative, remains positive above its positive sloping trigger line. The short term momentum indicator had given us a reasonable positive divergence at the late April low and so far so good. The short term rating continues to be BULLISH.

As for the immediate or very short term, that too is looking good. The Index is once more above its very short term moving average line with the line remaining positive. It had remained positive even during the past couple of days that the Index was below the moving average. Another sign that things are still looking up is the fact that the very short term moving average line remains above the short term line. As long as you have the situation of the more aggressive moving average staying above the less aggressive one, things remain positive. The Stochastic Oscillator, which dropped below its neutral line, is rising up but has not quite breached its neutral line. It is also still below its negative trigger line. So here we have one negative indicator within a bunch of positives. Keeping this in mind the rating is just shy of a full bull and is at a + NEUTRAL rating, heading towards a full bull. Tomorrow ??

As you see, I stick to a few simple charts and indicators for my work. I know there are many more sophisticated and probably more accurate indicators out there but none, to my knowledge, have worked as well, over time, with as little effort. I hope that as you read these commentaries you get to understand the indicators and can use this understanding for other of your investment activities. Nothing is perfect but as long as you understand this and ALWAYS have an exit strategy for your investments, things should work out quite all right in the long run. Let your profits grow and get rid of your reversals or losses FAST.