Merv's Week-End Commentary, 11 Jan 2009

Merv’s Weekly Uranium Review
for week ending 09 January 2009

Merv’s Daily Uranium Index
Market Data for Friday 09 Jan 2009

Open: 148.63
Hugh: 151.92
Low: 141.13
Close: 145.45
Volume: 4005

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

Well, the long holiday is over so I guess I’d just better get back to work. Sorry about missing my Thursday End-of-Day commentary. It was the last day of my vacation and party time.

After a nice move the previous week it was to be expected that we would get into a rest period. I guess the big question is “how long will it last?” That’s something I don’t know but after such a long spell in a lateral box one would expect still much, much more on the up side to come. Of course, the market does what it has to do to frustrate the maximum number of investors so anything could happen and one must be prepared for it. Look ahead for the good times but always be prepared to bail out fast in case those good times reverse.

On Friday the Merv’s Daily Uranium Index closed lower by 1.94 points or 1.32%. There were 19 daily winners, 27 daily losers and 4 going nowhere. The five largest were somewhat mixed. Cameco lost 4.6%, Paladin lost 4.7%, Uranium One gained 3.7%, Uranium Participation gained 0.8% and USED gained 3.3%. The best winner of the day was Laramide Resources with a gain of 16.0% while the worst loser on the day was Dejour Enterprises with a loss of 21.4%.

As for the week as a whole, the Merv’s Weekly Uranium Index gained 215.86 points or 6.26%. There were 30 weekly winners, 14 weekly losers and 6 weekly nothings. For the week the five largest stocks were mixed. Cameco lost 3.7%, Paladin gained 4.7%, Uranium One gained 3.7%, Uranium Participation lost 1.3% and USEC gained 11.6%. The best winner for the week was Quaterra Resources with a weekly gain of 47.7%. The worst loser was CanAlaska with a weekly loss of 30.6%.

With the weekly losses that some of these stocks have had one might become somewhat worried. Most stocks, such as CanAlaska, Titan, etc. have corrected their previous sharp moves and seem now to be stabilizing. They seem to have found a support although it is too early to confirm. It might be a time to be gauging their action for a continuation buy point.

On the long term the Weekly Index is just about at the moving average line. The line, however, is still sloping sharply lower so the rating is not expected to reverse very soon. The momentum indicator is above its trigger line but is still inside its negative zone. For now the long term continues to be rated as BEARISH but we might get some ratings improvement with another week or two of positive action.

On the intermediate term the Daily Index remains above its positive sloping moving average line. The momentum indicator had been in its positive zone but has dropped just slightly inside its negative zone with the negative action of the past few days. It is still, however, above its positive sloping trigger line. The volume indicator has been acting quite well and is above its positive sloping trigger line. Although the momentum indicator had dropped into its negative zone that was not enough to change the intermediate term rating. It remains BULLISH.

As for the short term, the Index is still above its short term positive sloping moving average line. The momentum indicator had been in its overbought zone and dropped below the overbought line for a signal that a rest or reaction might be ahead. Here we are. The momentum remains below its overbought line, below its negative trigger line but still in the positive zone. The daily volume action is doing what one would expect during a rest period after a good advance. As the Index moves slightly lower the volume activity is sharply declining. This is normal action. The Index might still decline a little further but I would not expect it to break below that support line (previously a resistance from the box). Despite the slight weakening in the momentum indicator the short term rating remains BULLISH.

As for the immediate direction of least resistance, well that would be to the lateral. The Stochastic Oscillator (SO) indicator is moving sharply lower and almost ready to enter its negative zone but this is an aggressive indicator and can turn or stabilize on a moment’s notice. I don’t see any serious decline from here although the Index could still move slightly lower. I don’t see any sudden upside for a while either but who knows, anything can happen.

JUST AS AN ASIDE

I guess everyone wants to see The One succeed in stimulating the U.S. economy with that $800,000,000,000.00 stimulus package. I’m one who thinks that government is the problem, not the solution. If government spending is great for improving a countries economic position then North Korea would be a Super Power. Besides, as I read the news, most of that money is going into all sorts of welfare programs. Even the tax reduction portion is mostly welfare not real tax reductions for the tax PAYER. The government spending that finally got the U.S. out of the Great Depression was money spent producing and manufacturing, not welfare.

I read an interesting proposal. I may have the numbers somewhat wrong but you can get the drift. If the government wants $800 Billion of new spending to stimulate the economy the best way is to let the people spend. That $800 Billion is something like 5 months worth of tax revenues. Give the people a 5 month tax free period when they can keep all of their earnings. THAT will stimulate the economy. Of course the 45% that do not pay taxes will not be too happy. In addition, after the 5 month period you will once more get your pay check AFTER tax deduction and will really be impressed by how much taxes you really pay. Not good for the government. So, it will never happen.