Merv's Weekly Commentary, 25 May 2008

Merv’s Weekly Uranium Review
for week ending 23 May 2008

Friday’s Daily data

Open: 307.25
High: 312.79
Low: 297.32
Close: 304.26
Volume: 5196

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

Friday was a dull day for uranium stocks (except for a couple of real winners) with the Daily Index barely moving, however, the week as a whole was not all that bad, even for the fact that there were only 4 trading days in the Canadian markets where most of these stocks are traded. The Weekly Index moved up 7.76% while the daily Index moved up only 3.72% on the week. The difference is in the method of calculating each Index. The Weekly is calculated based upon the AVERAGE weekly performance of the component stocks while the Daily close is an average of the closing prices with a suitable factor for consistency during component stock revisions. This last method is very similar to the way the Dow Jones Industrial Average is calculated. The Weekly Index gives the advantage to the lower priced stocks while the Daily gives the advantage to the higher priced stocks.

The Merv’s Weekly Uranium Index closed higher by 547.23 points or 7.76% versus last week. There were 37 weekly winners, 12 weekly losers and one unchanged. Except for Cameco the rest of the five largest stocks closed the week higher. Cameco lost 3.1%, Denison gained 2.9%, First Uranium gained 2.3%, Paladin gained 6.0% and Uranium One gained 3.8%. The best weekly winner was Crosshair Exploration with a gain of 35.7% while the worst weekly loser was Altius Energy with a loss of 14.8%.

On the daily Friday close the Merv’s Daily Uranium Index closed down by a mere 0.30 points or 0.10%. There were 22 daily winners, 22 daily losers and 6 unchanged. Of the five largest stocks Paladin was the only daily winner. Cameco lost 2.1%, Denison lost 4.0%, First Uranium lost 1.4%, Paladin gained 4.8% and Uranium One lost 2.9%. The best daily winner was Yellowcake Mining with a gain of 22.5% while the worst daily loser was UEX Corp. with a loss of 5.5%. Speaking of Yellowcake, it has been bouncing between $0.40 and $0.60 for two months now. Just a $0.10 change gives it a 20% move. However, it does look like it’s getting close to some kind of new move, most likely to the up side. Speculators or gamblers might just want to take a closer look at it.

Things seem to be looking up for the long term BUT things were looking up in February and earlier last August and September but to no avail, so, let’s not jump the gun and wait for the technical indicators to let us know if we are in a long term bull or not. For now the Index remains below its long term negative sloping moving average line. The long term momentum is still in its negative zone but is already above its long term positive sloping trigger line. The volume indicator is above its positive sloping trigger line. The dominant indicator is still the moving average which causes me to continue with the long term rating of BEARISH.

The intermediate term is more positive than the long term. The Index remains above its positive moving average line while the momentum indicator remains in its negative zone. The momentum is still heading towards its neutral line and has not got much more to go. It remains above its positive sloping trigger line. In other words, although the momentum direction is positive the momentum itself still has a little ways to go to get into its positive zone. The volume indicator remains above its positive trigger line. Despite the one negative from the momentum the intermediate term rating remains BULLISH.

For the past four days the Index has basically moved sideways. So how does this affect the short term prognosis? Not by much. The Index remains above its positive moving average line while the momentum indicator remains in its positive zone, above its positive trigger line. The momentum has not quite reached its overbought zone so one might have some reason to expect some more up side ahead. The action over the past several days has been trapped in an up trending channel which gives us additional reason to hope for more up trend ahead. The volume indicator remains above its positive trigger line although the daily volume action has been diminishing. This diminished volume action is not unusual during a lateral move and I would not place any great emphasis on it at this time. The short term rating remains BULLISH.

Another confirmation of a continuing short term up trend is the fact that the very short term moving average line (8 DMAw) remains above the short term moving average (15 DMAw). Despite the four days of lateral movement the Index remains above the positive sloping very short term moving average line. The aggressive Stochastic Oscillator continues to move lower, below its negative trigger line, but is still in its positive zone. All in all the immediate direction of least resistance still seems to be to the up side but now we need a 320 close to confirm that. The negative sloping Stochastic Oscillator is something to watch as it is a warning of weakening short term strength.