Merv's Daily Commentary, 26 June 2008

After The Close, 26 June 2008

Merv’s Daily Uranium Index
Market Data

Open: 278.63
Hugh: 286.80
Low: 270.75
Close: 278.48
Volume: 6937

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

I’m still not sure when I’ll get back to normal blogging. Things are just not going too well with my brother. Throat cancer, stomach ulcer, heart attack, diabetes, but he keeps on trucking. I should be posting on the week-end and possibly Monday. I can’t predict much beyond there.

Regardless of the market action elsewhere, the uranium stocks did next to nothing by time the day was finished. The Merv’s Daily Uranium Index was ahead by 0.88 points or 0.32%. There were 20 winners, 26 losers and 4 unchanged. The five largest stocks were mixed. Cameco gained 2.2%, Denison gained 0.5%, First Uranium lost 4.2%, Paladin lost 1.2% and Uranium One gained 4.1%. The best performer today was Yellowcake Mining with a gain of 21.9% while the worst performer was Energy Fuels with a loss of 9.9%.

Looking at the chart some encouraging signs jump up at you. The most encouraging is the support just above the 250 level. The Index is in the process of bouncing off the support. This has the makings of a bullish double bottom pattern and many speculators have a habit of jumping the gun and getting into the buying mood just as it starts its bounce. In reality, the double bottom does not get confirmed until the Index exceeds its previous top that was made in between the double bottoms. That would require a move to 320 for a reversal confirmation, per the double top technique.

The other encouraging sign is the action of the intermediate term momentum indicator versus the Index action. As the Index dropped to its previous low the momentum remained well above its previous low for a positive divergence sign. I would have preferred a positive divergence with the Index making a new low but we’ll take whatever little encouragement we can get.

As for the normal intermediate term indicators, the Index is below its slightly negative sloping moving average line while the momentum indicator is still in its negative zone but moving higher and is above its positive trigger line. From the normal indicators we are not yet at a positive or bullish rating. The rating is still at a BEARISH level but could change again with a couple of days of good upside action.

On the short term, the Index has climbed back above its moving average line but the line slope is still slightly negative. The short term momentum indicator is very close to its neutral line but still inside its negative zone. It is above its positive sloping trigger line. The rating here is better than the intermediate term but not yet fully bullish. I would rate the short term as + NEUTRAL, one level below a full bull.

As for the immediate term direction of the Index, that is to the up side. The Index is above its very short term moving average line and the line is in a positive slope. The Stochastic Oscillator is roaring higher and just about to enter its overbought level. The only caution is the fact that the very short term moving average line has not quite crossed above the short term moving average line, which would confirm a short term move in progress. It could cross in another day.

For most speculators and investors the time is still not quite ripe for jumping into the uranium stocks again. The price of uranium was unchanged this past week but that is at its low for the past many months. I would expect the stocks to anticipate a change in uranium price direction but that is not yet noticeable.