Merv's Daily Commentary, 24 Sept 2008

After The Close, 24 Sept 2008

Merv’s Daily Uranium Index
Market Data

Open: 181.15
Hugh: 188.11
Low: 174.81
Close: 180.91
Volume: 5251

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

Despite a very small upside move in the Index, today was basically a standoff. It’s going to be interesting which way the Index of stocks (as opposed to an Index of uranium utilities) moves from here. The price of uranium, which had basically been in a holding pattern for many weeks, took its biggest decline in many months. It was down $4.00 to $58.00 on Tuesday’s setting. For those who worry about such things one has to wonder if the stocks have overreached their decline and the price of uranium is just catching up to the stocks, or if it is going to be the other way around. I’m glad I’m a technician and don’t need to worry about such things. Just go where the charts take you and not to worry about anything else, after all, the charts reflect the knowledge of all the market participants who have studied all of such things and are acting with their money, either on the buy side or the sell side. It’s better to be one step behind these traders rather than to find oneself alone in a different direction. One should always remember that the speculators that have the capital to move stocks are those that have the best advance knowledge as to what’s happening in the industry. Following their lead is very often a profitable action.

The Merv’s Daily Uranium Index closed lower by a small 0.65 points or 0.36%. There was a standoff between the winners and losers with the winners numbering 21 and the losers numbering 22. Seven stocks had no clue which direction they wanted to go. As for the big 5, Cameco lost 0.1%, Denison lost 2.1%, First Uranium lost 0.7%, Paladin gained 3.0% and Uranium Participation lost 3.8%. The best winner of the day was Kodiak Exploration with a gain of 22.5% while the worst loser was Fission Energy with a loss of 12.1%.

The intermediate term indicators continue to remain unchanged. The Index remains below its moving average line (65 DMAw) and the line continues to slope downward. The momentum indicator (50 Day RSI) remains in its negative zone although it is still above its positive trigger line. The volume indicator (not shown) has just inched above its intermediate term trigger line although the trigger continues to slope downward. All in all, the intermediate term rating remains BEARISH.

On the short term things are also still the same, although some indicators are converging and ready to change. The Index remains above its short term moving average line (15 DMAw) for the fourth day in a row but still the moving average slope remains downward. It is turning and maybe another day will see it turned upwards. The short term momentum indicator (13 Day RSI shown yesterday) remains in its negative zone but still above its positive trigger line. The volume indicator is above its short term trigger line and the line here is positive. Nothing here has changed the short term rating, which remains as + NEUTRAL.

As for the direction of least resistance, that always is a toughie. The very short term moving average (8 DMAw) continues to move higher below the Index and has just crossed the short term average to the up side. The Index itself seems to be more in a lateral phase than up or down. The aggressive Stochastic Oscillator (shown yesterday) continues in its positive zone above its positive trigger line, although the SO is starting to turn around. We have what looks like a very small reverse head and shoulder pattern which could break on the up side on a move to the 193 level. Such a break would only project to about the 240 level and reflect a short term move but we’ll take it a day at a time. I will go with the path of least resistance still being the up side although there are a few cautionary indications of a possible turn down.