Merv's Weekly Commentary 28 June 2009

Merv’s Weekly Uranium Review
for week ending 26 June 2009

Merv’s Daily Uranium Index
Market Data for Friday 26 June 2009

Open: 174.42
Hugh: 179.34
Low: 170.60
Close: 176.89
Volume: 6640

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

The first half of the week was not so great but the last half was okay. The Daily Index has once more entered the area previously known as the “box” but because of the recent drop below the box support it no longer is a box. Over the past month the Index has established a short term resistance at the 180 level. We are butting up right against that level and the Index should breach it shortly, or else more bad news ahead. Uranium price has been in a real good rally mode over the past few months and is making new recovery highs. It still has a dollar or two to go before it breaches its previous high from last November but is getting there.

The Merv’s Daily Uranium Index closed the week on an up note. It gained 2.39 points or 1.37% on Friday. There were 23 winners, 22 losers and 5 going nowhere at the daily close for an almost neutral day as far as winners and losers were concerned. The five largest stocks were mixed on the day but with only minor moves. Cameco gained 1.1%, First Uranium lost 0.2%, Paladin gained 0.7%, Uranium One gained 1.1% and USEC lost 0.4%. The best winner of the day was Uranerz Energy with a gain of 39.2% while the loser of the day was Uranium Resources with a loss of only 4.8%.

As for the week as a whole, the Merv’s Weekly Uranium Index closed the week with a weekly loss of 96.60 points or 1.81%. There were 17 weekly winners, 29 losers and 4 going nowhere. The five largest stocks were mixed for the weekly performances. Cameco gained 2.9% on the week, First Uranium lost 11.2% on the week, Paladin gained 7.5%, Uranium One lost 4.1% and USEC gained 3.3% on the week. The best weekly winner was Uranerz Energy with a weekly gain of 36.5%, thanks to the Friday move, while the worst weekly loser was Rockgate Capital with a weekly loss of 17.9%.

We are really having a difference of opinion as far as the long term indicators are concerned. Using the Weekly Index, the Index just dropped below its long term moving average line and the line slope has just about turned to the down side. Using the Daily Index, the Index is still comfortably above its long term moving average line and the line slope is still quite positive. As for the momentum indicators, they are also not in total agreement with each other. The weekly momentum indicator is still above its neutral line in the positive zone but below its negative trigger line. The Daily Index momentum indicator continues to track a lateral path below its neutral line in the negative zone but just above its still negative trigger line. As explained in the past, the difference is in the fact that the Weekly Index favors the low priced stocks while the Daily Index favors the high priced stocks. The lower priced stocks are therefore harder hit on the down side BUT should be better performers once the Index starts its next real climb. For this week I will give two separate long term ratings. As it applies to the lower priced stocks the long term rating has dropped to a – NEUTRAL rating, one notch above a full bear. For the high priced stocks the long term rating remains as BULLISH.

On the intermediate term I go totally to the Daily Index. The Daily Index is once more above its moving average line and the line slope continues in an upward path. The momentum indicator is moving higher in its positive zone and has crossed above its trigger line although the trigger is still sloping downward. The volume indicator continues to move higher above its positive trigger line but has not quite reached its previous all time high yet. All in all, the intermediate term rating is back to a full BULLISH rating.

On the short term the Index has crossed above its moving average line but the line slope is still to the down side. The momentum indicator remains just below its neutral line in the negative zone but above its positive trigger line. As for the daily volume action, it continues lower than I would like to see, but as mentioned the other day, it may be due to the holiday season. All in all, the short term rating is considered as + NEUTRAL rating, one level below a full bull.

As for guessing what the immediate direction of least resistance is, I’m continuing with the lateral for another day.