Merv's Daily Commentary, 21 July 2008

After The Close, 21 July 2008

Merv’s Daily Uranium Index
Market Data

Open: 252.53
Hugh: 256.43
Low: 245.92
Close: 252.9
Volume: 3352

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

Although the Index was up 1%, the % change version was lower by 1% and more decliners than advancers, so, we are still in a guessing game as to the validity of the Friday downside break. It looks like it’s another day or two of watching and waiting.

The Merv’s Daily Uranium Index closed up by 2.53 points or 1.01%. This Index is calculated by a method very similar to that used by the Dow Jones company to calculate their Dow Jones Industrial Average (and other averages). Using an average percentage change method that is used for the Weekly Index this Daily Index would have declined by 1.08%. This is why I think we are still in a waiting game for downside break-out confirmation. Of the 50 component stocks there were 19 daily winners but 26 daily losers. Another reason to give it another day or two before jumping the gun on a negative prognosis based upon the down side break. Winners and losers are not in sync with the Index move. As for the five largest stocks, they were mixed. Cameco gained 2.3%, Denison gained 1.3%, First Uranium lost 2.8%, Paladin lost 2.6% and Uranium One gained 3.9%. The best winner of the day was Uranium Resources with a gain of only 7.1% while the worst loser was Xemplar Energy with a loss of 14.3%.

The chart shown today is an intermediate term point and figure (P&F) chart. It’s been some time that the chart was shown so I just thought I’d do it today. As most readers know by now my views are simple as is my analysis. For P&F reversal I need two things to happen. The trend must close above (or below) the trend line and the plot must break above (or below) two previous highs. We recently had the trend breaking above two previous highs BUT the down trend line was still not broken, so no P&F reversal. We now have a new down side break but as mentioned above, it may still be suspect. Where we stand with the P&F projection is simple. The projections for the first two breaks (to 400 and then to 270) have been met. There is still a projection to the 190 level. Very often as we get further along in a trend the projections become too great and are not met. What bothers me about this last projection is that I get the same number by two different count methods. So, this projection still must be taken very seriously. Friday’s down side break would project to the 130 level. Now that may just be too far and most likely will not be met.

I’m running a little late today so I’ll cut the daily commentary and just say that the action today has not changed anything that I wrote during the Week-End commentary. The only comment to add is that the short term momentum is taking a little bounce off its oversold line while the Stochastic Oscillator is sitting on top of its oversold line. As nothing really has changed the ratings remain. Intermediate term rating is still BEARISH as is the short term rating. The immediate term direction of trend is turning from negative towards a neutral trend so anything can happen tomorrow.