Merv's Daily Commentary, 18 June 2008

After The Close, 18 June 2008

Merv’s Daily Uranium Index
Market Data

Open: 277.56

Hugh: 281.81

Low: 267.86

Close: 273.98
Volume: 4520

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

Well, the slow but steady decline continues. As yet it has not gotten into new low territory but bit by bit it will get there, although we all hope not. The latest price posted by The Ux Consulting Company, LLC (see Uranium Link section) has uranium down another $2.00 to $57.00. The trend to lower uranium prices just does not seem to end. An article in Canada’s Financial Post was not all that cheerful for uranium investors. What I’d like to see is a front page headline that uranium is in the dumper and in a serious bear market, that would then be the signal for the end of the uranium bear. Front page headlines or cover stories in major magazines have that reverse effect.

Today the Merv’s Daily Uranium Index closed lower by 1.86 points or 0.67%. There were 15 winners, 30 losers and 5 unchanged. Of the 5 largest stocks 2 were winners and 3 were losers. Cameco lost 0.2%, Denison lost 2.2%, First Uranium lost 0.7%, Paladin gained 4.8% and Uranium One gained 0.5%. The best daily winner was East Asia Minerals with a gain of 14.4% while the worst daily loser was Uranium Resources with a loss of 7.6%.

On the intermediate term things just keep drifting slowly further into the negative. The Index continues to move lower below its negative moving average line and the momentum indicator continues its move lower into its negative zone below its negative trigger line. The volume indicator is also starting to get negative. It is below its activity over the past few weeks and has moved below its intermediate term trigger line. The trigger itself has turned to the down side today. All in all the intermediate term rating remains BEARISH.

When you start with a bearish rating and everything continues to move lower what you still have is a bearish rating. That’s where we are with the short term. The Index remains below its negative sloping moving average line and the momentum indicator continues in its negative zone, below its negative trigger line. The indicator is not far from its oversold line so we just might be in for some relaxation of the steady downward drift. At this point it does not yet mean a reversal ahead but it might be getting close to giving us such indication. For now BEARISH is the only rating possible for the short term.

The more aggressive momentum indicator, the Stochastic Oscillator, is interesting. Five days ago it started a bounce off its oversold line. It has continued to move higher off the line and for the past four days has remained above its now positive sloping trigger line. The immediate momentum of the price action suggests underlying strength that is not shown in the price action, except for the fact that the daily close continues to be closer to the daily mid point of the trading range and not necessarily a very bearish sign. I must still continue to view the immediate direction of the Index as negative but one should be prepared for a reversal of some sort ahead.