Merv's Weekly Commentary 19 July 2009

Merv’s Weekly Uranium Review
for week ending 17 July 2009

Merv’s Daily Uranium Index
Market Data for Friday 17 July 2009

Open: 171.05
Hugh: 173.31
Low: 166.75
Close: 170.24
Volume: 4576

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

Whoever said “water, water everywhere and not a drop to drink” must have been a tea totaler, I’m for a few good stiff swigs of strong Canadian whisky. At this point I’d sooner not see any more water.

Well, it was mostly up hill during the week except for a little reaction on Friday. Still the week as a whole was positive and it is starting to give us hope for the future. Unfortunately, we need more than hope to push the market higher. The volume activity seems to suggest that although we are getting some good individual stock moves the speculators in general are still holding back. Uranium itself is not helping. This week the price dropped $2.00 but more importantly, as one reader pointed out, uranium is butting up against a resistance level and must go through or it just might take another deep plunge. So, watch the price of uranium each week to see if it can stabilize and continue higher or if it has REALLY stopped moving higher and turned around. With the China economy somewhat back on track one might wonder why the weakness in uranium.

The Merv’s Daily Uranium Index closed lower by 1.19 points or 0.70% on Friday (no big deal yet). There were 18 winners, 28 losers and 4 going nowhere. As for the five largest stocks, Cameco lost 1.6%, First Uranium gained 0.3%, Paladin lost 1.2%, Uranium One lost 1.8% and USEC lost 0.6%, all minor moves. The best performer of the day was Tournigan with a gain of 9.7% while the worst performer was Freewest with a loss of 12.9%.

For the week as a whole, the Merv’s Weekly Uranium Index closed higher by 396.86 points or 8.45%. There were 39 weekly winners, 10 losers and one lost sole going nowhere. The five largest did okay with one doing great. Cameco gained 3.7% on the week, First Uranium gained 9.9%, Paladin gained 8.9%, Uranium One gained 2.6% and USEC was a real winner with a weekly gain of 30.6%. The best weekly winner, however, was East Asia Minerals with a weekly gain of 58.0% while the worst weekly loser was Khan with a loss of 27.5%.

Both the Weekly and Daily Indices are above their long term positive sloping moving average lines. Last week the Weekly momentum joined the Daily momentum in the negative zone but this week the Weekly is back above its neutral line in the positive zone. The Daily momentum indicator continues its sideways track just below its neutral line. As for the long term volume activity, the volume indicator remains above its long term trigger line for a still positive reading. All in all, the long term is back to a BULLISH rating.

That intermediate term moving average line seems to be acting as a barrier to further upward movement in the Daily Index. I guess we’ll have to wait for another few more days to see if this is so. For now the Index remains below the negative sloping (although just barely) moving average line. The momentum indicator is still in its positive zone but has started a turn around to the down side. It still remains above its trigger line for a positive reading. The volume indicator, which had dropped below its trigger line recently, is once more above its trigger and the trigger is slightly positive. They are so close that one day of negative action could turn the volume indicator back to the negative side. For now the intermediate term rating is at the - NEUTRAL level.

Although the short term indicators went positive during the week they are still in a precarious position. The Index remains above its positive sloping moving average line but as mentioned above, the Index seems to be hitting a wall and may just come back down a notch or two. The momentum indicator had moved into the positive a few days back and is still positive but the Friday action turned it around and it is heading lower and finished the week just slightly above its neutral line. Its trigger line is still positive for a plus. Unfortunately, the daily volume action is very low and shows a lack of enthusiasm for the up side by the speculators who can move markets. We need to see the volume pick up a great deal more on the up side days or else the longevity of this recent rally is limited. For today the short term rating remains BULLISH, confirmed by the very short term moving average line crossing above the short term line on Friday.

As far as the immediate direction of least resistance, the movement seems to be towards a reaction. The Stochastic Oscillator remains in its overbought zone and has turned almost towards the down side. It still remains above its trigger so another day or two may be required to confirm a negative immediate direction of trend. Still positive is the daily Index action with it being above its very short term positive sloping moving average line. I’ll remain on the cautious side and go with the down side here.

As one can see from this week’s Table, previously posted, there have been some great moves over the past 50 and 200 days. The stocks had been battered to such extend that these moves still look pretty small compared to where the stocks last peaked out. If one looks at most stocks there are still hundreds of % moves to go for most stocks to reach their previous peaks. No need yet to panic and buy but if you KNOW something about a stock that makes you want to get in then check the table and make sure the intermediate term for the stock is POS and the short term is also. The short term moving average line should be sloping upwards.