Merv's Daily Commentary 27 Aug 2009

After The Close, 27 Aug 2009

Merv’s Daily Uranium Index
Market Data

Open: 167.50
High: 169.67
Low: 160.57
Close: 164.79
Volume: 5528

Note that the volume is an average volume of round lot sales for the 5 0 component stocks. For total volume, multiply by 5000.

Another day, another downer. Drip by drip, these small negative moves by the Daily Index start to mount up after a while. Previously mentioned was the cautionary activity by the volume indicator. Yesterday it fell to its lowest level in over three months and today it continues. Speculators are getting more and more frustrated with the slow pace of any good news and must be lightening up on their positions. The price of the metal isn’t helping any either. It fell another $1.00 this week. Well, all we can do is follow the action and act accordingly. NEVER, NEVER fight the market.

The Merv’s Daily Uranium Index fell 3.62 points today, or 2.15%. There were 16 winners, 26 losers and 8 not giving a damn. As for those five largest stocks, they were all losers today. Cameco lost 2.2%, First Uranium lost 6.1%, Paladin lost 1.9%, Uranium One lost 0.8% and Uranium Participation lost 1.2%. The best daily performer was Mawson with a gain of 13.4% while the worst performer was East Asia Minerals with a loss of 22.3%. As noted by a commenter a while back Easy Asia is more of a gold company now rather than a uranium one. I will be replacing East Asia with Ucore Uranium on the week-end.

With the intermediate term momentum now moving into its negative zone all intermediate term indicators are negative. The Index is below its negative moving average line, the momentum is in its negative zone below its negative trigger line and the volume indicator is below its negative trigger line. What can I say? The intermediate term rating can only be BEARISH.

The short term is no better. I have shown the next support level in dashed blue. This is the low from late July. As we see, the short term momentum has already broken below its late July low ahead of the Index. The underlying strength in the Index move is weaker than it looks, from a short term perspective. In any case the Index is below its negative moving average line, the momentum is in its negative zone below its negative trigger line and the daily volume activity is very slightly picking up but on the down side moves. Here too, the only rating must be a BEARISH rating.

As for the immediate direction of least resistance, the downside Index moves have not been all that convincing. Most of the time the Index ends up closing near its mid point of the daily range. It is still in what I would call a lateral path but is nearer to the bottom of the path and doesn’t have much more wiggle room before it most definitely trends in a bearish manner. I will stick with my lateral path as the continuing path of least resistance. Of course to stay in the path we are going the have some upside soon or the path is broken, so possibly the up side is not far away.