Merv's Weekly Commentary 21 June 2009

Merv’s Weekly Uranium Review
for week ending 19 June 2009

Merv’s Daily Uranium Index
Market Data for Friday 19 June 2009

Open: 174.26
Hugh: 180.08
Low: 171.71
Close: 177.87
Volume: 7676

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

Friday was an up day but the week as a whole was a bummer. One of the problems when you have two different Indices supposedly giving you the same information is the fact they may be differing with each other. We have seen the Daily Index being trapped in that box while the Weekly Index has been moving higher into new recovery highs. What’s going on here?

As we know, the two Indices are calculated using different methods. The Daily Index sort of favors the higher priced stocks while the Weekly Index favors the lower priced stocks. It looks like the lower priced stocks have been out performing the higher priced stocks recently.

The Merv’s Daily Uranium Index closed on Friday on the up side by 5.49 points or 3.18%. There were 29 winners, 16 losers and 5 confused. The five largest stocks were mixed on the day. Cameco gained 3.7%, First Uranium gained 0.2%, Paladin lost 0.2%, Uranium One gained 4.7% and USEC lost 0.2%. The best performer on the day was Rockgate Capital with a gain of 12.0% while the worst performer on the day was Purepoint Uranium with a loss of 8.1%.

For the week as a whole, the Merv’s Weekly Uranium Index closed lower by 386.21 points or 6.74%. There were 10 weekly winners, 39 weekly losers and only one not knowing which way to go. For the five largest stocks Cameco lost 4.4% on the week, First Uranium lost 26.1%, Paladin lost 12.5%, Uranium One gained 2.8% and USEC lost 12.8% during the week. The best weekly winner was RPT Uranium with a weekly gain of 33.3% while the worst weekly loser was First Uranium with that 26.1% weekly loss.

On the long term nothing has changed. The Weekly Index is still far above its positive long term moving average line. The same is true for the Daily Index. As for the long term momentum indicator, well that difference of opinion continues. The weekly indicator remains in its positive zone although showing some weakness. The Daily long term momentum indicator continues to move in a lateral path just below its neutral line in the negative zone. The Volume indicator remains the strong indicator and is just below its all time highs, above its positive trigger line. All in all I will still call it a long term BULLISH market at the present time.

Things are a lot messier on the intermediate term. We are getting whip-sawed here (or is it whip-lashed?). One day the Daily Index drops below its moving average line and a couple of days later there it is once more above the line. The Daily Index closed on Friday above its still positive sloping moving average line. This is a good example as to why I wait for the moving average line to change direction rather than panic purely on the crossing by the Index. The momentum indicator continues to move in a slight downward trend but still inside its positive zone. It also remains below its negative sloping trigger line. As for the volume indicator, it remains in a positive trend above its positive trigger line. On the intermediate term we are once more at a BULLISH rating.

The short term has not yet recovered from its earlier in the week plunge. The Index remains below its negative sloping moving average line and the momentum indicator remains in its negative zone. The momentum has moved above its trigger line but the trigger is still pointing downward. The daily volume action remains basically neutral although it is slightly lower than its average volume over the past short term. All in all, the short term rating remains BEARISH.

Although the Index is still below its very short term moving average line and the Stochastic Oscillator is still in its negative zone both are heading higher. I was right on Thursday to go positive for Friday’s direction, hey, one day in a row isn’t bad, I think I will stick with that and go with a positive Monday. Maybe I can make it two days in a row.