Merv's Daily Commentary, 28 July 2008

After The Close, 28 July 2008

Merv’s Daily Uranium Index
Market Data

Open: 236.27
Hugh: 245.23
Low: 232.91
Close: 239.62
Volume: 3371

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

Little by little the Uranium Index is trying for a recovery. Unfortunately, it has tried a few times before, in just the very recent past, but failed each time. Let’s keep our fingers crossed that this time a rally does set in. I would be more comfortable that a rally of sorts was taking place after the Index closed above the 247 mark. Until then, well hope springs eternal.

The Merv’s Daily Uranium Index closed higher by 2.55 points or 1.07%. There were 26 winners and 24 losers, almost a 50/50 split. This is the first time that I can remember that there were no unchanged stocks on the day. What does that mean? Hell if I know, I just thought I’d put that out there as if it does mean something. As for the five largest stocks, they all were on the plus side. Cameco gained 1.2%, Denison gained 2.9%, First Uranium gained 0.5%, Paladin gained 1.8% and Uranium One gained 6.8%. The best performer on the day was Kodiak Exploration with a gain of 11.8% while the worst performer was Yellowcake Mining with a loss of 21.9%. Just a side note but the AVERAGE performance of all the component stocks was a negative 0.58% versus the Index plus 1.07%. The smaller, more speculative, stocks were the losers on the day with slightly bigger % losses than the larger, less speculative, stocks. By itself nothing that is important, just another space filler info.

Although things are starting to firm up a little, nothing has yet changed on the intermediate term. The Index is still below its negative sloping moving average line while the momentum indicator is still in its negative zone below its negative trigger line. The momentum has turned and is heading towards the trigger so we could expect it to cross above the trigger in a day or two. It might take another day for the trigger itself to turn, which from my perspective is the more important event. The volume indicator remains below its negative sloping trigger line. For today I can only remain with my BEARISH rating but look forward to starting an upgrade in a day or two, if the turn around continues.

As for the short term, that is starting to look more encouraging. Although the Index is still below its short term negative sloping moving average line the momentum indicator has reversed its direction, crossed back above its oversold line and trigger line and the trigger has just turned upwards. So, from the underlying strength of the price movement things are getting stronger and more positive. Unfortunately, although the momentum has crossed above its oversold line it is still well inside its negative zone. What this means is that we might be in a short rally mode but not yet necessarily into a basic reversal of trend. For the short term the indicators have not yet reversed enough to change the rating yet, it remains BEARISH.

The Aggressive Stochastic Oscillator, same as the short term momentum, has also moved back above its oversold line and above its now positive trigger line. Unfortunately, the price action has not yet reversed enough to change the direction of motion. That is still basically lateral. We are inside a short downward (bullish) wedge pattern and a move above the wedge should signal a short term rally. What that could eventually grow into we must see from the subsequent activity. For now watch that 247 mark. A close at or above there should signal a rally in progress.