for week ending 24 July 2009
Merv’s Daily Uranium Index
Market Data for Friday 24 July 2009
Note that the volume is an average volume of round lot sales for the 50 component stocks. For total volume, multiply by 5000.
Note that additional charts of the Daily and Weekly Indices were posted earlier and should be viewed during this commentary.
Well, another week has gone by and we’re still waiting for that big push. Uranium prices are not helping so it’s all up to the stocks to go their own way, but they are not, at least not yet, or in the direction desired.
There are two features on the chart that are not commented upon on a regular basis. First is that resistance level at 180. This seems to be a barrier that has kept the Daily Index from moving higher these past few weeks. The longer it’s there the stronger it gets, and the stronger the advance should the Index break above.
The second feature is the FAN PRINCIPLE trend lines. Long term readers of my precious metals commentaries (on various web sites) will recognize the FANS in the chart. This set of FANS is called a bullish decelerating FAN as the outcome is usually a bullish upside break and higher values. With this set of FANS the breaking of the first FAN trend line is a cautionary event. The breaking of the second FAN is a trend reversal while the breaking of the third FAN is a confirmation of the new move. What does one expect from this pattern? Well, there is no clear cut criteria as to what to expect after a confirmation but I usually assume that the move would take us back to at least the FAN apex point. This is a short term formation and therefore we should not expect too much. Each FAN trend line is initially a resistance line. Once broken the line becomes a support to future moves. It is not unusual for the market action to remain within the confines of two lines, moving up and down between the two, for some time.
On the other hand we have that Daily Index chart posted earlier today. We see that since the beginning of the recovery the Index has been trapped in a wide up trending channel. It seems to be bouncing off the lower support line. If the Index should start a gradual move towards the upper resistance line, that’s a long way off and could be a good % move.
The Merv’s Daily Uranium Index closed slightly on the down side on Friday. It was lower by 0.86 points or 0.49%, nothing really. There were 19 winners on the day, 24 losers and 7 standing still. Of those five largest stocks, Cameco lost 2.0%, First Uranium lost 2.1%, Paladin lost 2.7%, Uranium One gained 4.7% and USEC gained 0.5%. Benton was the winner of the day with a gain of 11.8% while Powertech Uranium was the loser with a loss of 8.2%.
As for the week as a whole, the Merv’s Weekly Uranium Index closed the week higher by 16.48 points or 0.32%, not much for a whole week. There were 20 weekly winners, 26 weekly losers and 4 doing nothing. Of those five largest, they were mixed. Cameco gained 3.7% on the week. First Uranium lost 0.5%, Paladin gained 1.2%, Uranium One gained 5.8% and USEC lost 6.5%. The best weekly winner was Kodiak Exploration with a weekly gain of 30.4% while the loser on the week was Alberta Star with a loss of 11.1%, just beating out Western Uranium by 0.1% on the down side.
Nothing has changed in the long term technical situation. Both the Daily and Weekly Indices are above their positive sloping moving average lines. The Weekly momentum indicator is in its positive zone while the Daily Index momentum remains in its negative zone but above a positive trigger line. The volume indicator remains in a basic lateral track but still above its positive long term trigger line. All in all I will stay with the BULLISH rating despite the still negative Daily Index momentum.
Nothing has changed for the intermediate term either. The Daily Index remains below a negative sloping moving average line while the momentum indicator remains in its positive zone above a positive trigger line. The volume indicator, as mentioned above, is tracking a lateral path but unlike the long term the indicator has dropped below its trigger line and the trigger has turned to the down side. The best rating I can continue to give the intermediate term at this time is a – NEUTRAL rating, one level above a full bear.
On the short term things can change faster than during the other periods, although they haven’t changed much over the week. The Daily Index remains above its short term moving average line and the line continues to point higher. For confirmation, the very short term moving average line remains above the short term line. The momentum indicator is tracking almost horizontally but inside its positive zone and above its positive trigger line. The daily volume action is no great shakes and needs to improve. The short term rating remains BULLISH.
As for that immediate direction of least resistance, well I think I will go back to my lateral guess. The very short term moving average is still positive while the Stochastic Oscillator continues to move sharply lower, but still just inside its positive zone.