Merv's Week-End Commentary, 18 Jan 2009

Merv’s Weekly Uranium Review
for week ending 16 January 2009

Merv’s Daily Uranium Index
Market Data for Friday 16 Jan 2009

Open: 140.60
Hugh: 144.79
Low: 134.72
Close: 139.98
Volume: 5899

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

STIMULUS, STIMULUS EVERYWHERE

And it’s all pure politics.

As Peter Foster, writing in the January 17, 2009 Financial Post, quoted that world famous political economist Groucho Marx: “Politics is the art of looking for trouble, finding it everywhere, diagnosing it incorrectly, and applying the wrong remedies.”

So it goes around the world.

I just found this so true that I thought I’d fill in some space here with it.

Friday was sort of a blah day for uranium stocks. Although about two thirds of the Index component stocks closed higher the Index barely moved. Most gains were of a small order. As for the week as a whole, well that was a little bit of a downer. Let’s get right into the action.

The Merv’s Daily Uranium Index closed on Friday ahead by 2.02 points or 1.47%. There were 34 winners, 8 losers and 8 going nowhere. With such a large ratio of winners versus losers one would have expected the Index to close a whole lot higher, but as I said, most of the gains were small. Of the five largest stocks, Cameco lost 0.2%, Paladin gained 1.2%, Uranium One gained 6.7%, Uranium Participation lost 2.9% and USEC lost 2.0%. The best daily winner was Uranium Power with a gain of 36.8% while the worst daily loser was Quaterra with a loss of 14.3%.

As for the whole week, well, the Merv’s Weekly Uranium Index closed the week with a loss of 181.80 points or 4.96%. There were only 15 weekly winners and 35 weekly losers. Cameco lost 4.1%, Paladin gained 0.4%, Uranium One gained 6.1%, Uranium Participation lost 7.3% and USEC lost 0.6%. The best weekly winner was Titan Uranium with a weekly gain of 25.5% while the worst weekly loser was Quaterra with a loss of 43.8%.

A look through the various links on the front page suggests that uranium is not having a bullish time of it. Another drop in price this past week does not help the stocks.

The P&F chart shown here a few days back has not changed with the subsequent action. There has not been enough up or down action to add any additional plots. This is the advantage of P&F charts, one does not have to do anything on the chart unless there is significant action to justify doing something.

Looking over at the Weekly Index we see that the Index closed below its long term moving average line and the line continues to trend downward. The long term momentum indicator (not shown, the indicator shown is an intermediate term weekly version) remains below its neutral line in the negative zone but above its positive sloping trigger line. Going over to the daily chart for a peak at the volume indicator we see that it is quite positive and well above its positive long term trigger line. The indicator still have not improved enough to affect the long term rating, it remains BEARISH.

As for the intermediate term, the Daily Index continues to trade above its positive sloping moving average line. The momentum indicator, however, continues below its neutral line in the negative zone and just below its positive sloping trigger line. The volume indicator remains positive well above its positive intermediate term trigger line. Although there is some weakness, especially in the momentum, there is not yet enough to change the rating, it remains BULLISH.

On the short term we have a real mixture of indicators. The Daily Index closed just very slightly above its positive sloping moving average line, however, the very short term moving average line just crossed the short term line to the down side. The short term momentum indicator remains inside its positive zone but is below its negative sloping trigger line. Although the cumulative volume indicator is showing a positive volume activity the actual daily volume action leaves a lot to be desired. The daily volume action has been basically below its short term average volume value and Friday’s action was no different. With the Index moving above its moving average the rating has once more improved to the BULLISH level.

As for the immediate direction of least resistance, I still think that the Index will move up and down over a small range thereby creating a lateral path for a short while yet but as for the immediate direction, I’ll have to go with the up side. The Index is heading upwards. The Stochastic Oscillator is heading upwards and its time for a few days of upside Index action.