Merv’s Weekly Uranium Review
for week ending 24 October 2008
Merv’s Daily Uranium Index
Market Data for Friday 24 Oct 2008
Open: 95.54
Hugh: 106.69
Low: 91.86
Close: 103.93
Volume: 4673
Note that the volume is an average volume of round lot sales for the 50 component stocks. For total volume, multiply by 5000.
Well, what is there to say? On Friday the Daily Index started on the down side and almost broke below the lower support from the box but then turned around and ended the day on the up side, but so little on the up side that one might ignore it and call it a neutral day. Despite the Index almost neutral day the average performance of the component stocks shows a negative 2.23% on the day. The AVERAGE performance of the component stocks is, of course, reflected in the Weekly Index while the Daily Index uses a method similar to that used to calculate the daily Dow Jones Industrial average. Needless to say, the Daily Index continues inside that box. We are waiting for it to break out of the box and confirm what the next direction will be. So let’s just get to the nuts and bolts of what went on on Friday and the week in general.
Friday was a so-so day with the Merv’s Daily Uranium Index closing up by 0.34 points or 0.33%. There were 16 winners, 27 losers and 7 going nowhere. The significantly higher number of losers confirms the average daily performance indicated above. Of the five largest stocks by market value, Cameco gained 1.9%, Denison and Paladin went nowhere, Uranium One lost 9.2% and USEC gained 1.1%. The best daily performer was Uranium Participation with a gain of 15.0% while the worst daily performer was Terra Ventures with a loss of 18.9%.
As for the week as a whole, the Merv’s Weekly Uranium Index lost 287.81 points or 12.06%. There were 7 weekly winners, 41 weekly losers and 2 that went nowhere. As for those five largest stocks, Cameco gained 5.2% on the week, Denison lost 9.3%, Paladin lost 8.1%, Uranium One lost 20.2% and USEC lost 3.2%. The best weekly performer was Uranium Participation with a gain of 13.9% while the worst weekly performer was Vena Resources with a weekly loss of 42.9%.
The long term prognosis for uranium stocks has not changed for quite some time. The Weekly Index continues to move lower and is in new low bear market territory after a slight bounce up last week. The Index remains below its long term negative sloping moving average line and the momentum indicator remains mired well inside its negative zone. In fact it is inside its oversold zone which is often a precursor to a rally or a change in direction. A change in rating, however, is still a long way off. The rating remains BEARISH on the long term.
On the intermediate term there is still a lot of space between the Index and its negative moving average line. The momentum indicator continues to show strength and remains above its positive sloping trigger line but still in its negative zone. The direction continues upward but the location is still negative. As for the volume indicator, it looks like it is more lateral than up or down but remains below its negative sloping trigger line. Putting it all together the intermediate term rating remains BEARISH.
On the short term, where we can expect the early hints of any turn around, that turn around is not yet evident. The Index remains just below its negative sloping moving average line and the very short term moving average remains below the short term average. The short term momentum indicator is sitting just below its still positive sloping trigger line just above its oversold line in the negative zone. At the present time the short term rating must remain BEARISH.
As for the immediate direction of least resistance, well that I will continue as lateral until the Index breaks out of the box. Going strictly from the very short term indicators, however, the Index remains below its negative sloping very short term moving average line. The aggressive Stochastic Oscillator is below its negative trigger line and moving lower inside its negative zone. The trend of the Index for the past four days has been to the down side but as mentioned I’ll call it lateral until the box is broken.
I know many of you are getting awfully fed up with the uranium stock situation. However, the general market is no better lately. Those of you following the technical signals should be sitting on the sidelines having that beer and relaxing. The turn will come and the technical indicators will tell us soon after it does, with plenty of time for new profits after that. DO NOT try to pick the bottom. How many times have the bottom pickers picked the bottom in the past several months only to be disappointed each time. The technical way may not be perfect and may even be wrong at times BUT will let you know of the error quickly so that you do not loss very much capital and have it available for the next time.
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