Merv's Week-End Commentary, 20 Dec 2008

Merv’s Weekly Uranium Review
for week ending 19 December 2008

Merv’s Daily Uranium Index
Market Data for Friday 19 Dec 2008

Open: 111.35
Hugh: 118.03
Low: 106.96
Close: 113.05
Volume: 12728

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

What a blah week for uranium stocks. Still trapped inside that box and looks like the Daily Index just has no mind to get out. Technicians like to draw lines so I have drawn another set on the Daily Index. This represents a short term up trending channel. Not a very significant set of lines but the Index is doing nothing so I need to while the time away somehow.

The Merv’s Daily Uranium Index closed higher on Friday by 1.93 points or 1.73%. Over the week this Index fell some 3%, not much as things go. There were 21 winners on Friday, 22 losers and 7 going nowhere, another blah day. As for the five largest stocks by market value, Cameco gained 2.5%, Paladin lost 1.0%, Uranium One lost 15.2%, Uranium Participation gained 3.1% and USEC gained 1.2%. The best daily winner was Dejour Enterprises with a gain of 24.1% while the worst daily loser was UEX Corp. with a loss of 19.7%.

On the week as a whole, the Merv’s Weekly Uranium Index closed the week with a gain of 9.61 points or 0.45%, much less than the Daily. There were more weekly losers than gainers so maybe the Weekly Index had it right. On the week there were 21 winners, 26 losers and 3 going nowhere. Of the five largest stocks, Cameco lost 4.5% on the week, Paladin lost 12.2%, Uranium One lost 9.6%, Uranium Participation lost a0.2% and USEC lost 8.6%. The best winner on the week was Uranium Energy with a weekly gain of 78.9% while the loser of the week was Mega Uranium with a loss of 27.1%.

From the long term stand point nothing much has changed, and we usually don’t expect much change from the long term. The most notable thing on the weekly chart is the strengthening of the momentum indicator. While the Index had been moving very slightly lower or moving laterally the momentum indicator has been moving slightly higher. Now this is not an unusual situation. If the Index should move in a straight line sideways one would see the momentum indicator move gradually towards its neutral line. However, looking for encouraging signs any strengthening in the momentum indicator could also mean a strengthening in the underlying Index action. Let’s take it as a positive for now. However, the Weekly Index is still well below its negative moving average line and the momentum is still in its negative zone but continuing slightly above its positive trigger line. For now the only rating I can give the long term is a BEARISH rating.

As for the intermediate term, looking at the daily chart it just seems that all of the shorter term moving average lines are on top of each other. The Daily Index closed on Friday just a hair above its moving average line but the line continues to slope downward. The momentum indicator remains in its negative zone but also above its positive trigger line. It is also still above its up trend line drawn from the early October low. The volume indicator, which seems to have been asleep for weeks now, has suddenly perked up. I would not place too much emphasis on Friday’s sharp volume rise as this was primarily due to the activity of one stock. The volume could just as quickly go to sleep. With the Index so close to the moving average line any small move could reverse the ratings. For today the best I can give the intermediate term is a + NEUTRAL rating.

On the short term, the Index closed just a hair below the moving average line but the line itself turned just very gently upwards. The momentum indicator, which dropped just below its neutral line on Thursday, once more moved just above the neutral line. It is still, however, below its negative sloping trigger line. Other than Friday’s volume action (which was due primarily to one stock) the volume action remains underwhelming. All in all, the short term rating becomes a – NEUTRAL rating today.

As for the direction of least resistance, well I will stick with the lateral direction. That seems to be the best bet lately.

Christmas is almost here and I will be on the move again. For the next three weeks I will be away from home ground and using the laptop, which long term readers will remember was a disaster last time I tried it. Hopefully, I have learned how to use these danged contraptions by now, but there is no guarantee. In any case posting may not be every day, most likely every second day. It will depend upon the daily activities planned during the trip.

Here is wishing all a very Merry Christmas and a prosperous New Year.